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Production 

For marketing year (MY) 2013/14 (July-June), the Agricultural Trade Office (ATO/Sao Paulo) forecasts the Brazilian coffee production at 53.7 million bags (60 kilograms per bag), green equivalent, down 2.4 million bags compared to MY 2012/13 (56.1 million bags). Information was collected from field trips, government sources, state departments of agriculture, growers’ associations, cooperatives and traders. 

Arabica trees production is projected at 38.5 million bags, down 6 percent relative to the previous season. The off-year of the production cycle in southern and center-western Minas Gerais is likely to be partially offset by the good production potential (on-year) in eastern Minas Gerais and Espirito Santo, therefore reducing the overall gap between the on- and off-year in Brazil. Arabica coffee harvest should begin in May/June. 

Robusta production is forecast to yield 15.2 million bags, similar to revised production for MY 2012/13 (15 million bags), primarily due to the good production potential in Espirito Santo. Robusta producing regions began harvest in March/April 

Post revised upward the MY 2012/13 coffee production estimates to 56.10 million bags, based on updated information from post contacts. According to post contacts, roughly 80 percent of the Brazilian 2012/13 crop has already been marketed to date, showing a slow flow of product compared to previous seasons. Traders report that growers have been resistant to sell the crop (especially high quality product) in expectation for better prices, therefore selling only enough bags to balance their cash-flows.

In January 2013, the Brazilian government (GoB), through the Ministry of Agriculture, Livestock and Supply’s (MAPA) National Supply Company (CONAB), released its first survey projecting Brazilian coffee production for MY 2013/14. Total production is projected between 46.98 and 50.16 million 60-kg bags, a 0.66 to 3.84 million bag reduction compared to the final estimate for MY 2012/13 (50.82 million bags – 38.34 million bags for Arabica and 12.82 million for Robusta coffee. 

CONAB projects arabica production between 34.99 and 37.47 million bags, whereas the robusta crop is estimated between 11.98 and 12.69 million bags. CONAB is expected to release the second coffee survey for the 2013 crop in mid-May. 

The Brazilian Institute of Geography and Statistics (IBGE) has also released its March 2013 coffee production forecast for MY 2013/14. The IBGE forecast for the 2013 coffee crop is 2,949,429 metric tons of coffee, or 49.16 million 60-kg coffee bags, a 4 percent drop compared to 2012 (3,063,513 metric tons or 51.06 million bags). 

Coffee Area Tree Inventory

Yields 

ATO/Sao Paulo projects the Brazilian coffee yield for MY 2013/14 at 25.15 bags/hectare, down 5 percent from MY 2012/13 (26.65 bags/ha). The yield differential for arabica trees between an on- and off-year has been reduced over time, due to improved crop management, including pruning, replacement of old coffee fields by more dense fields (more trees/hectare), irrigation as well as improvement of coffee varieties. Robusta fields have also improved crop management, irrigation and the use of better clones.

Coffee Prices in the Domestic Market 

The Coffee Index price series released by the University of Sao Paulo’s Luiz de Queiroz College of Agriculture (ESALQ) follows. The series tracks coffee prices in the domestic spot market since September 1996. Higher coffee supply in 2012 led to lower domestic prices both in the local currency, the real, as well as in U.S. dollars (US$ 201.14/bag in 2012 as opposed to 297.52/bag in 2011). The devaluation of the real also contributed to lower coffee prices in U.S. dollars.

Consumption

For MY 2013/14, Post forecasts the Brazilian coffee domestic consumption at 21.15 million coffee bags (20.02 million bags of roast/ground and 1.13 million bags of soluble coffee, respectively), up 2.6 percent relative to the previous season, reflecting results from the newest domestic consumption survey released by the Brazilian Coffee Industry Association (ABIC). 

Brazilian consumption for MY 2012/13 is estimated at 20.62 million 60-kg bags, green equivalent, up 2.95 percent compared to MY 2011/12 (20.03 million bags). Roast and ground coffee consumption accounted for 19.50 million bags, whereas soluble consumption is estimated at 1.12 million bags. Estimates are based on periodic surveys conducted by ABIC and reflect population growth, increased per capita consumption, increased purchasing power, increased quality of the domestic brands, strong growth of superior and gourmet coffee and the effects of domestic campaigns to promote coffee consumption. 

ABIC reports that the coffee industry processed 20.33 million bags, green equivalent, from November 2011 to October 2012, up 3.09 percent compared to the same period the year before (19.72 million bags). Per capita consumption for 2012 is estimated at 4.98 kg of roasted coffee per person, up 2 percent from 2011. 

ABIC projects total domestic consumption for 2013 at 20.9 million bags, up 2.8 percent compared to 2012. Total market sales are projected at R$ 8.7 billion for 2013. 

Trade

Exports 

ATO/Sao Paulo forecasts total Brazilian coffee exports for MY 2013/14 at 31.04 million bags, similar to the previous marketing year (31 million bags). Green bean exports are likely to account for 27.5 million bags, while soluble coffee exports are forecast at 3.5 million bags. According to post contacts, Brazil is likely to regain market share from Central American coffees for washed coffee due to lower expected supply from that producing region. 

Coffee exports for MY 2012/13 were revised to 31 million 60-kg bags, green beans, down 1.95 million bags from previous estimate, based on year-to-date export volumes and anticipated May-June loadings. Green bean (arabica and robusta) exports are estimated at 27.465 million bags, whereas soluble coffee exports are estimated at 3.5 million bags 

According to the March 2013 Coffee Market Report International released by the International Coffee Organization (ICO), total world coffee consumption for 2012 is preliminarily estimated at 142 million bags, up 3 million bags compared to 2011. 

Total coffee exports during the July 2012 – April 2013 period were 25.7 million bags, similar to the same period during MY 2011/12 (25.8 million bags). Preliminary data show that coffee export registrations for May 2013 were 519,358 million bags while cumulative green coffee export shipments for May 2013 are 177,670 million bags through May 9. 

CECAFE reports that in spite of the delay in the harvest and processing of the beans in the beginning of the crop due to rainfall, coffee exports have been catching up to the regular flow.

Stocks 

During MY 2013/14, total ending stocks are projected at 8.233 million bags, up 1.51 million bags relatively to MY 2012/3 (6.723 million bags). CONAB coffee stocks in December 31, 2012 are reported at 1.61 million bags, whereas coffee stocks held by MAPA/DECAF (Funcafe stocks) are virtually depleted. 

CONAB’s 2013 privately-owned stocks survey has not been released yet. The survey includes coffee stocks held by growers, coffee cooperatives; exporters, roasters and the soluble industry on March 31st. The Coffee National Council (CNC) which includes several coffee associations and cooperatives has recently decided to restart the release of coffee stocks owned by coffee cooperatives, however no release has been made to date. 

Policy

In March 2013, the National Monetary Council (CMN) approved the refinancing of the credit line to fund storage costs. Producers were given an additional 12 months to repay back their debts. 

On May 7th, MAPA announced the new reference price (minimum price) for arabica coffee at R$ 307.00 per bag, up R$ 45.31 compared the previous price (R$ 261.69 per bag). The robusta coffee reference price (minimum price) remained unchanged at R$156.57 per bag. The reference price will be used by the GOB for any support price tools adopted by the government. No such measures have been announced. Both Arabica and robusta coffee producers are unhappy with such prices. They claim that the reference price should have been set at approximately R$ 340.00 and R$ 180 per bag, respectively

Black Sea Trade Flows (BST Flows)

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