Brazil's coffee stocks, on course for a four-year low, may
not stage a recovery next season, Cepea said, flagging "poor" results from the
robusta bean harvest.
Brazilian coffee inventories at the close of 2015-16, in
June, "will be the smallest since 2011-12", the institute said, noting the
prospect of demand ahead of last year's harvest.
Domestic consumption, estimated by 20.5m bags a year by
industry group Abic, plus exports, which have reached 30.4m bags for the first 10
months of the season, have already exceeded last year's production, pegged at 49.4m
bags by the US Department of Agriculture.
Indeed, the pace of exports is running only 2% behind the
high achieved last season, when shipments ended at 36.5m bags, although Cepea
acknowledged that the squeeze on supplies could bring a soft end to 2015-16 for
"The current low supply for coffee, especially of high-quality
beans, may limit shipments towards the end of the season," the institute,
attached to Sao Paulo University, said.
And Cepea raised doubts over a rebuild in Brazilian coffee
inventories next season, despite acknowledging the prospect of a sizeable 2016 arabica
harvest, which many commentators have placed above 40m bags.
This increase "however, is not an indication of a recovery
in stocks", the institute said, signalling the potential for further strength in
"Some other important producing countries should not have a large
offer of beans for export."
Vietnam, the largest producer of robusta beans, "has already
indicated that it will see a 30% production drop in 2016-17".
Colombia - the second-biggest producer of robusta beans,
after Brazil - is "still suffering from the effects of El Nino", and has
suffered a dent to its shipments from the "high volume of low-quality coffee".
"Shipments from African countries and Indonesia may also be
limited in 2016-17, due to increased domestic demand."
'Quality has been
Cepea also highlighted concerns over the robusta harvest in
Brazil itself, the second-biggest producer of the variety, saying that a hangover
from drought in major growing regions had shown up in "poor" harvest results.
The harvest is some 50% complete in Espirito Santo, where it
started in April, and 80% finished in Rondonia.
As of mid-May, robusta yields were "up to 25% less than in a
normal harvest", Cepea said.
"In addition, the quality has also been troubling [the
industry]," the institute said.
Nonetheless arabica coffee prices have performed modestly more
strongly of late in Brazil, rising by 3.7% over the last month to R$492.52 a
bag, compared with a marginal decline in robusta values, to $389.21 a bag.
The performance took the premium of arabica coffee over
robusta back above $100 a bag for the first time in two months.