Report Highlights:

Brazilian coffee production for marketing year 2013/14 (July-June) was revised downward to 53.1 million 60-kg bags, a 600,000 million bag drop compared to previous figure. Coffee exports are unchanged at 31.04 million bags. Carry-over stocks are projected at 7.97 million bags.

Production

The Agricultural Trade Office Sao Paulo (ATO) revised the Brazilian coffee production estimate for marketing year (MY) 2013/14 (July-June) to 53.1 million 60-kg bags, green equivalent, down 600,000 bags compared to previous figure due to adjustments in state productions, mainly in Minas Gerais, Sao Paulo, Parana and Espirito Santo. Arabica production is estimated at 39.2 million bags, whereas Robusta output is estimated at 13.9 million bags. The harvest ended in October and according to the industry, the overall quality of the 2013 crop is worse than the previous year due to weather problems, e.g., dry spells in January/February and rainfall during May/July in many growing areas.

Area harvested and tree inventory estimates are unchanged.

In September 2013, the Brazilian government (GOB), through the National Supply Company (CONAB) of the Ministry of Agriculture, Livestock and Supply (MAPA), released the third official coffee production estimate for MY 2013/14. As reported by CONAB, coffee production is estimated at 47.54 million bags, 1.05 million bags down from the previous estimate in May.

The Brazilian Institute of Geography and Statistics (IBGE) has released its August 2013 coffee production forecast for MY 2013/14. IBGE projects production of 2.846 million metric tons of coffee, or 47.44 million 60-kg coffee bags, a 7 percent drop vis-à-vis MY 2012/13 (51.03 million bags). No official forecast has been announced for MY 2014/15. Arabica trees will be in the on-year of the biennial production cycle, therefore contributing to an expected rise in supply for the upcoming crop.

Production Costs

Production costs in Guaxupe – Minas Gerais, a major producing region in Brazil, in 2013 are estimated at US$ 187.56/bag, a 12 percent increase compare to 2012 (US$ 167.37), mainly due to higher fixed and after harvest costs.

Coffee Prices in the Domestic Market

Higher supply and the devaluation of the real relatively to the U.S. dollar depressed coffee prices in 2013 both in the local currency, the real, as well as in U.S. dollars (US$ 121.14/bag during the July-October 2013 compared to US$ 189.87/bag during the same period in 2012).

To provide support to coffee growers, the Brazilian government released a total of R$ 1 billion to purchase 3 million 60-kg bags of coffee at R$ 343.00 per bag, through four option contract auctions held in September and October. Growers paid premiums that varied from R$ 1.715 thru 7.70 per bag to acquire the right to exercise the option to sell the product in March 2014. The market did not react to this government policy and prices remain depressed.

Consumption

No changes have been made to coffee domestic consumption estimates. ATO/Sao Paulo estimates the Brazilian coffee domestic consumption for MY 2013/14 at 21.15 million coffee bags a 2.6 percent increase compared to MY 2012/13 (20.62 million 60-kg bags, green equivalent).

Trade

Exports

No changes have been made to total Brazilian coffee exports for MY 2013/14 which are estimated at 31.04 million bags. Green bean exports are expected to contribute 27.5 million bags, while soluble coffee exports are estimated at 3.5 million bags.

Coffee exports for MY 2012/13 were slightly revised downward to 30.66 million 60-kg bags, green beans, down 340,000 bags from previous estimate, based on updated information from the industry. Green bean (arabica and robusta) exports are estimated at 27.173 million bags, whereas soluble coffee exports are estimated at 3.485 million bags.

According to the September 2013 Coffee Market Report released by the International Coffee Organization (ICO), total world coffee consumption for 2012 is estimated at 142 million bags, up 2.95 million bags or a 2 percent increase vis-à-vis 2011 (139.05 million bags).

Total coffee exports during MY 2012/13 period were 30.66 million bags, up 860,000 60-kg bags from MY 2011/12 (29.8 million bags). According to CECAFE, coffee exports during July-September 2012 are 7.4 million bags, up 6 percent compared to the same period in 2012.

Preliminary data show that coffee export registrations for October 2013 were 2.92 million bags while cumulative green coffee export shipments for October 2013 are 2.2 million bags.

Stocks

ATO/Sao Paulo estimates ending stocks in MY 2013/14 at 7.97 million bags, up 910,000 million bags compared to MY 2012/13 (7.06 million bags). CONAB coffee stocks on July 2013 are reported at 1.614 million bags.

CONAB recently released the 2013 private stocks survey, including stocks held by growers, coffee cooperatives, exporters, roasters and the soluble industry on March 31st. Private stocks are estimated at 13.938 million bags, a 65 percent raise from 2012 (8.414 million bags)