SAO PAULO, Brazil – With the record output last season, arabica coffee prices have been dropping sharply in the 2018/19 crop, says Cepea in its latest report. After rising between October and November 2018, quotes started to decrease in December, influenced by estimates for a satisfactory coffee harvest in Brazil in the 2019/20 crop, despite the negative biennial cycle. In the second fortnight of February, arabica prices resumed closing below 400 BRL per 60-kilo bag in Brazil.
This season (July/18 to February/19), the CEPEA/ESALQ Index for arabica coffee type 6 (delivered in São Paulo) has averaged 424.94 BRL per 60-kilo bag, 5.5% down compared to that in the same period last crop, in nominal terms, and more than 10% down in real terms (prices were deflated by the IGP-DI from January/19). The current price levels are also the lowest since the 2013/14 crop.
For robust, price drops are even steeper. This season (July/18 to February 25 2019), the CEPEA/ESALQ Index for the robusta type 6, screen 13, Espírito Santo State, has averaged 319.43 BRL per 60-kilo bag, 6.5% down, in nominal terms, and more than 20% down, in real terms. Similar to arabica, the current price levels for robusta are the lowest since 2013/14.
2019/20 Season
It rained in most arabica and robusta producing regions in February. In Rondônia, the rain volume was satisfactory. In Espírito Santo, however, rains were enough in some areas, but insufficient in some other areas, which may end up lowering productivity in the 2019/20 crop.
Brazilian Market
The lower price levels for arabica and robusta coffee and speculations regarding the 2019/20 crop slowed down the trading pace in the Brazilian market in February. Although it rained in most coffee-producing regions, many agents were still concerned about the negative effects of the dry and hot weather observed in January on the total coffee output. In this scenario, many coffee growers should wait for better definitions about possible crop failures to, then, market significant amounts.
Arabica coffee prices dropped in the Brazilian market in February, influenced by the US dollar, which pressed down arabica Futures at ICE Futures (New York Stocks Exchange). In that scenario, most agents left the market, keeping liquidity low in Brazil. On Feb. 28, the CEPEA/ESALQ Index for arabica coffee type 6 (delivered in São Paulo) closed at 396.68 BRL (105.78 USD) per 60-kilo bag, 4.4% down compared to that on Jan. 31.
As for robusta, the CEPEA/ESALQ Index for the robusta type 6, screen 13, Espírito Santo State, rose a slight 0.6% in the same period, closing at 304.60 BRL (81.23 USD) per 60-kilo bag on Feb. 28.
