SAO PAULO, Brazil – The month of November was marked by significant valuations for arabica coffee, in both the Brazilian and the international markets, says CEPEA in its latest report. Abroad, the futures at ICE Futures (NY) were higher than 230 cents of dollar per pound in the last week of the month – on the 24th, the March/22 contract hit 245.40 cents of dollar per pound, the highest level since January 2012.
Besides the valuation of the futures, Brazilian agents were mostly away from the spot market, expecting prices to rise higher, thus boosting the upward trend of arabica values in Brazil. On November 25, the CEPEA/ESALQ Index for arabica coffee type 6 (delivered to São Paulo city) closed at BRL 1,466.92 (USD 263,69)/60-kilo bag, the highest real level since December 20, 1999, and the new nominal record in the series of Cepea, which began in 1996 (values were deflated by the IGP-DI from Oct/21).
Price rises are still related to logistic issues and concerns about supply, since crop failures are expected in important arabica-producing countries, such as Brazil. According to international news agencies, shipping delays and higher sea freight rates are making agents worried about the possibility of a coffee shortage in the coming months. This is leading agents to increase purchases of contracts at ICE Futures.
In regards of coffee production in 2022, there are concerns about the possible effects of the La Niña phenomena on crops in Colombia and Vietnam. In Brazil, farmers have reported problems related to flower set in most arabica crops.
On November 29 and 30, prices dropped, influenced by concerns about the new covid-19 variant. Still, the CEPEA/ESALQ Index for arabica coffee type 6 (delivered to São Paulo city) closed at BRL 1,420.09 (USD 251.48)/bag, 13% up from that on October 29.
Robusta – The prices for robusta coffee increased in November too, but not as much as that for arabica. The boost came from increases in the future contracts and the absence of sellers in the market. Although the CEPEA/ESALQ Index for the robusta type 6, screen 13, Espírito Santo, returned to around BRL 820/60-kilo bag, most farmers continued away from the national spot market.
Late in the month (29 and 30), robusta prices dropped, due to concerns about the new covid-19 variant – on November 30, the CEPEA/ESALQ Index for the robusta type 6, screen 13, Espírito Santo, closed at BRL 815.82 (USD 144.47)/bag, 5.8% up from that on October 29.
Robusta farmers have already sold a large volume of the crop at high prices. Therefore, these sellers are waiting for higher valuations in order to trade larger batches. In regards of crops, they are in the stage of fruitlet set, and with high rainfall since October, the robusta output in the 2022/23 season is expected to be satisfactory. However, with the arabica crop failure, problems in other countries and logistic issues, prices may still rise in the coming months.
