The International Coffee Organization flagged the headwind
to Brazilian coffee exports from a firmer real, as well as weakened
inventories, even as industry data showed a slow post-harvest pick-up in
The ICO - while flagging that global coffee exports had "remained
at a very high level" into July, rising 11% year on year to 9.4m bags -
contrasted the strong global performance with a decline in shipments from
Volumes from Brazil, the top coffee growing and exporting
country, dropped 11% to 1.75m bags, including soluble coffee, "the lowest since
February 2004, " the organisation said.
The downturn reflected in part weak exportable supplies,
depleted by "the previously poor harvest", when robusta coffee output in
particular was hurt by drought.
The ICO also flagged an "unfavourable dollar exchange rate
eroding the competitiveness of Brazilian coffee on the world market".
Indeed, the real has recovered by 7.1% against the dollar so
far in 2017, so making Brazilian exports less affordable to buyers in dollars,
the currency of international trade in many commodities, including coffee.
By contrast, the ICO underlined "significant increases in"
coffee exports from Colombia, the second-biggest grower and shipper of arabica
coffee beans, and whose currency, the peso, has held steady against the dollar
so far this year.
Colombian "volumes shipped during the month of July have
doubled compared to last year", the organization said, if acknowledging that
the year-before figure was unusually depressed thanks to a truckers' strike.
"Nonetheless, the recent figures represent a continuation of
this coffee year's strong export performance," with Colombia's shipments for 2016-17,
which started in October, up 11.6% year on year as 11.2m bags.
The comments came even as Cecafe, the Brazilian coffee
exporters' industry group, unveiled data for last month showing total exports
of 2.37m bags.
The data represented a marked pick-up from July, and a
reflection of the boost to exportable supplies from the arabica coffee harvest.
"August brings a better outlook for exports," said Nelson
Carvalhaes, the Cecafe president, flagging "signs of recovery".
However, with the performance representing the weakest for any
August since at least 2009, Mr Carvalhaes urged caution over revival
While this month "should again see higher volumes, around
20% higher" than in August, even an increase at that level, implying September shipments of some 2.85m tonnes, would represent a decline in volumes of 7%
year on year, on Cecafe data.
The boost to Brazil's coffee exports from the 2017 crop has
been delayed in part by wet weather which, besides slowing the harvest, has hampered
the drying of beans too, to render them fit for storage.
Furthermore, there has been talk of Brazilian growers
holding off sales in the hope of higher prices.
In fact, Brazilian arabica prices are, at R$444.12 a bag
according to research institute Cepea, down some 8.6% so far in 2017, with those
of robusta beans down 19.8% at R$395.58 a bag, weighed by improved production
after rain relief to drought-hit growing areas.