Friday 09 December 2022

BRAZIL – BTG Pactual to start trading coffee

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MILAN – Brazilian multinational investment banking firm BTG Pactual plans to start trading physical coffee this year, reports The Wall Street Journal.

This is part of the Brazilian investment bank’s strategy to expand its commodities business, says the daily.

Traders in the unit would buy coffee beans from growers and sell them to clients such as roasters.

The expansion of BTG Pactual’s commodities business comes as many U.S. and European banks are downsizing or eliminating their raw-materials trading businesses amid increased government scrutiny.

BTG Pactual, Brazil’s only publicly traded investment bank, already trades in the energy, base metals and grains markets

BTG Pactual has a current market-cap of around US$ 14,5 billion, assets of US$ 75 billion, and AuMs of US$ 85 billion. The bank is listed in the São Paulo Stock Exchange and Amsterdam Stock Exchange.

In other news, German global banking and financial services company Commerzbank said in a report last week that Brazilian harvest this year “will not be quite as bad as the most pessimistic forecasts currently predict.”

Furthermore, the bank said that “we still believe that the drought will not result in significant damage for the crop next year”.

The comments contrast with those from observers who believe that 2015 Brazilian coffee output will prove weak too, given that crop is borne on branches grown the previous year – and with new foliage growth in 2014 having been limited by the lack of rainfall.

In a recent presentation at the International Coffee Seminar in Guaruja, Procafe agronomist Jose Matiello reiterated the forecast made last month that Brazilian coffee output may fall further next year, to 38.7m-43.6m bags.

This compares with the 40.1m-43.3m bags the group has forecast for this year, one of the lowest estimates in the market, and well below figures as high as 60m bags expected before drought struck.

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