ao link

Cepea flags role of low-quality harvest in curbing Brazil coffee exports

TwitterLinkedineCard

The lower quality of this year’s harvest may be spurring a downturn in Brazilian coffee exports, while boosting the premium earned by higher scoring beans, Cepea said.

 

Cepea, a research institute attached to Sao Paulo University, flagged “quality problems” in this year’s Brazilian arabica crop which had raised supplies of lower-specification beans.

 

The crop was dogged by the knock-on effects of an extended blossoming last year, which led to a dispersed ripening period difficult for mechanical harvesters to negotiate, with late rains, which knocks beans to the floor, a setback too.

 

However, market contacts “have reported lower demand” for lower quality type 7 arabica, in the face of ample supplies of robusta, which has gained share in Brazilian coffee blends, with a “low” export pace of the beans too.

 

Export impact

Indeed, Cepea flagged market ideas that type 7 coffee had - besides strength in the dollar, which curtails the affordability of assets priced in the greenback – “been reducing Brazilian coffee exports”.

 

International Coffee Organization data on Monday showed a slowdown to 3.2% in the pace of growth in Brazilian all-coffee exports in September, the last month of the global 2018-19 coffee marketing year, over which the country’s shipments soared 29% overall.

 

For October, official Brazilian trade data on Friday showed a drop of 4.0% year on year in exports to 3.15m bags.

 

‘Decreased sharply’

The dynamics have also fostered a narrowing in the price gap between type 7 arabica beans and type 7/8 robusta beans, “after being wide in the last two crops”.

 

Cepea estimated at R$44.57 per bag the premium of type 7 arabica, over the last four months, down from R$60.59 per bag for the 2018 crop.

 

“Although robusta prices have been dropping in the current season,” thanks to a continued recovery in production from 2016’s drought-affected low, “quotes for arabica type 7 decreased sharply in the last two months, helping to narrow the price gap”.

 

By contrast, the premium of higher quality arabica beans over robusta coffee has widened, standing at R$135.55 per bag for the July-to-October period (actually the first four months of Brazil’s 2019-20 coffee marketing year) compared with an average of R$100.35 per bag last season.

 

This premium is measured as the price of higher-grade, type 6 arabica and robusta beans.

 

Price outlook

Cepea nonetheless raised doubts over the price gap beween type 6 beans continuing to widen, forecasting instead pressure on both arabica and robusta values.

 

“For robusta, production is high this crop and the volume available in 2020-21 is expected to be large,” the institute said, noting too ideas of a “good” harvest in Vietnam, the world’s top robusta producer.

 

For arabica, pressure will come from the prospect of an “on” year in 2020 in Brazil’s cycle of alternate higher and lower harvests.

 

Indeed, “growers still have coffee remaining from 2018-19”, the previous on year, which saw a record crop.

TwitterLinkedineCard
Related Stories

Evening markets: Weather worries keep a bid under ags

US export sales data for grains prove disappointing. But there are enough concerns over dryness and cold to keep the likes of sugar and wheat trending higher

Evening markets: Double trouble sends ag commodity prices soaring

Worries over inflation combine with weather concerns to send prices in an array of ags higher. Corn and rapeseed hit multi-year highs

Dryness worries grow for Brazilian corn, sugar producers

"If the forecasted rains disappoint later this week, there is a strong possibility that the Brazilian corn estimate may be lowered"

Evening markets: Buoyant China imports spur grain price rebound

Grain futures stage a turnaround Tuesday, helped by expanding Chinese imports. The likes of coffee and cotton end higher too
Home | About | RSS | Commodities | Companies | Markets | Legal disclaimer | Privacy policy | Contact

Our Brands: Comtell | Feedinfo | FGInsight

© Agrimoney.com 2021

Agrimoney.com and Agrimoney are trademarks of Agrimoney Ltd
Agrimoney is part of AgriBriefing Ltd
Agrimoney Ltd is registered in England & Wales. Registered number: 09239069