Monthly real average for Arabica coffee in Brazil is the lowest since April 2021

SAO PAULO, Brazil – According to the latest report from Cepea, domestic prices for Arabica coffee signaled a reaction in early July, however, the monthly average of the CEPEA/ESALQ Index for arabica coffee type 6, delivered to São Paulo city, closed at BRL 819.95 per 60-kg bag in the first fortnight of the month, the lowest since April 2021, when it closed at BRL 792.20/bag, in real terms (averages were deflated by the IGP-DI from June/23).

This scenario is concerning Brazilian coffee farmers. Many of them claim that the current prices paid for the 2023/24 crop of coffee is reducing their profit margins and limiting investments in the activity.

Cepea surveys show that the volume traded anticipatedly has been lower than that from previous years, and many farmers have been more vulnerable to price fluctuations in the spot market.

Besides, the inputs used in production were purchased at high prices, mainly fertilizers. With arabica devaluations, farmers are now focused on the harvesting, being away from the market.

As for robusta coffee, purchasers put pressure on quotations in the last couple of weeks. Although prices have been near BRL 700/bag, this variety was not being sold in the Brazilian market. However, in the last days, slight devaluations led some farmers to sell robusta, fearing that prices may drop more steeply.

It is important to highlight that arabica devaluations hamper the maintenance of robusta prices at high levels, although the share of this variety in coffee blends is higher than that of arabica.

Abroad, arabica futures are fluctuating at ICE Futures (NY), however, drops prevail. Quotations are being influenced by corrections and technical recoveries, currency exchange oscillations and the weather in Brazil.

In the Brazilian market, the CEPEA/ESALQ Index for arabica coffee type 6, delivered to São Paulo city, closed at BRL 821.75 (USD 171.41) per 60-kg bag on July 14th, a slight 0.47% down compared to that on June 30th.

For robusta coffee, the CEPEA/ESALQ Index (Espírito Santo) for the type 6, screen 13, closed at BRL 651.59 (USD 135.92)/bag, 1.1% up in the same comparison.