The Council of Brazilian Coffee Exporters (Cecafe) says the country’s coffee stocks are likely to hit an all-time low by the end of the season in March but it will have little effect on prices.
In a recent research note, Commerzbank Research noted that Brazil had exported large quantities of coffee for years, as well as consuming a lot itself, but the unsatisfactory 2017/18 crop has failed to deliver much new supply.
“In recent months, this had already driven export activity down significantly as compared with previous years,” said Commerzbank. “For 2017 as a whole, Cecafe has thus reported a 10 per cent year-on-year decrease and the lowest export figure in five years. As a result, Brazil’s share of global exports declined from 28.8 per cent in 2016 to 25.8 per cent. Only sluggish exports are likely in the first half of 2018.”
However, as Commerzbank also noted, consumer markets are still amply supplied with coffee, however, after having previously replenished their stocks considerably.
“All hopes are now pinned on the 2018/19 crop,” said Commerzbank. This will be harvested from April. It looks set to be much better than the last crop, even though it is unclear what effects last year’s dry spell will have.
“Rainfall has improved conditions of late. 53-54 million bags are mostly anticipated, after just 45 million bags in 2017/18. This would be a new record.
“Due to increasing supply from other countries – above all Vietnam, the second-most important coffee country – coffee prices are not currently reacting to the declining stocks.”
At the time of writing, Arabica coffee was trading at 120 US cents per pound, a level it last fell below for any length of time around the turn of 2015/16. The Robusta price has remained close to an 18 month low for several weeks.