Cepea: Arabica prices increased in the Brazilian market during January, but liquidity still low due to lesser activity

SAO PAULO, Brazil – Arabica coffee prices increased in the Brazilian market in January, informs CEPEA in its latest report. The CEPEA/ESALQ Index for arabica coffee type 6, delivered to São Paulo city, ended the month at BRL 1,474.34 (USD 278.02)/60-kilo bag, 42.76 Reais/bag up (+3%) from that on the last working day of December/21. This increase was linked to the valuation of future contracts at ICE Futures and, largely, to the absence of sellers in the national spot market.

Despite the price rises, most agents stayed away from the market in January, and a few deals were closed during the month. The absence of agents reflected the daily price fluctuations abroad and uncertainties about the 2022/23 harvest.

Future contracts were majorly influenced by technical factors, although international agents are still concerned about the volume to be harvested in the 2022/23 season.

For Brazil, Conab (Brazil’s National Company for Food Supply) estimates the output to reach 55.7 million bags in 2022, 16.8% higher than that in the previous season – with 38.7 million bags of arabica coffee, 23.4% up, in the same comparison. On the other hand, Rabobank forecasts the Brazilian coffee production at 63.5 million bags in 2022/23, with 42 million bags accounting for arabica coffee.

This scenario of different estimates for the 2022/23 output is helping to keep agents away from the market in Brazil. It is important to highlight that the rains from January favored crops conditions and the growth of coffee beans, however, significant losses have already been confirmed.

Robusta

January was marked by low liquidity in the Brazilian market of robusta coffee. Most farmers have made cash flow this season, since they sold part of the output at higher prices at the beginning of the 2021/22 crop. Thus, since late 2021, farmers have been selling small volumes and, according to Cepea collaborators, they may continue away from the market until the beginning of the 2022/23 harvest, forecast to late March/early April.

Robusta prices did not change much in January – the CEPEA/ESALQ Index for the robusta type 6, screen 13, Espírito Santo, ranged between BRL 824 and BRL 836/bag during the month. On January 31, this Index dropped to BRL 819.8 (USD 154.59)/bag, 1% down from that on Dec. 30, 2021.

Crops

The production of robusta coffee is expected to be high next season, mainly in Espírito Santo. Rains in January favored beans and, with the high temperatures along the month, some agents believe maturation may be earlier this year.