CEPEA/ESALQ Index for arabica type 6 at 438.77 reais/60-kg bag on April 15, up 10.7% from March 31; CEPEA/ESALQ Index for robusta coffee type 6 at 253.33 reais/60-kg bag, down 1.5%

Nevin Barich

PIRACICABA, Brazil , April 22, 2014 (press release) – The world coffee sector is focused on the volume that will be harvested in Brazil in the 2014/15 season. The decrease of world’s major producer will affect the global availability, besides reducing the domestic supply. Therefore, players fear a deficit in the coffee supply, which might result in stocks decrease and has been responsible for rises in Brazil and in the international market and for sharp oscillations in some moments.

According to the study that CNC (Brazil Coffee Council) and Fundação Procafé released in mid-April, the Brazilian production in the 2014/15 season (arabica and robusta) might total between 40.1 and 43.3 million 60-kilo bags. This study took into account Conab’s forecast released in January (between 46.5 and 50.1 million, 13.7% smaller).

The decrease is mainly explained by the hot and dry weather that affected main coffee producing regions at the beginning of this year, especially in January and February. CNC’s study indicates that the 2015/16 Brazilian crop might have already been affected due to the dry weather.

Considering the average production forecasted by CNC, of 41.7 million bags, Cepea figures indicate that Brazilian stocks in the 2014/15 crop would be extremely reduced or even totally consumed. In global terms, stocks would be relatively comfortable, but also smaller. These perspectives have already pushed up coffee quotes in both the domestic and international markets, despite recent price oscillations.

Players surveyed by Cepea say that it still early to quantify losses caused by the dry weather – a clearer scenario would be possible only when grains will be harvested. However, preliminarily, players expect that the reduction forecasted by CNC, of 13.7%, might be close to reality. In case these data are confirmed, the volume will be 15.1% smaller compared to 49.1 million bags estimated by Conab for 2013/14.

Due to uncertainties, domestic and international prices may continue to oscillate. Quotes might not have a clear trend while Brazilian and international scenarios of production are not well defined.

As for arabica market, quotes were soaring in Brazil in the first fortnight of April. In spite of that, the pace of trades was calm and sellers were expecting even higher prices to trade. On April 15, the CEPEA/ESALQ Index for arabica type 6 closed at 438.77 reais (196.14 dollars) per 60-kilo bag, picking up 10.7% in relation to March 31.

Concerning robusta, on April 15, the average of the CEPEA/ESALQ Index for the robusta coffee type 6 was 253.33 reais (113.24 dollars) per 60-kilo bag, dropping 1.45% in the first fortnight of the month. (Cepea – Brazil) 

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