SÃO PAULO — This year was marked by lower prices for both arabica and robusta coffee in the Brazilian market, says Cepea in its most recent report. Decreases are attributed to the record production of both varieties in the 2018/19 season (which totaled 61.7 million bags, according to Conab data released in December/18) and the consequent rebound of global stocks.
In addition, fluctuations of the exchange rate in the second semester of 2018 and good expectations regarding the 2019/20 crop also influenced values in Brazil.
Due to the weak prices during the year, producers of arabica and robusta have kept refrained from negotiations, maintaining liquidity low in Brazil. Trades were closed mainly in periods when international values and dollar quotes were high, especially in October.
Arabica
With positive expectations regarding the 2018/19 harvesting, prices of arabica coffee moved down in the first months of the year, increased slightly in May and June, due to unfavorable weather conditions and the truckers’ strike, which affected activities on the field. In July, quotes dropped more significantly, due to the return of activities.
Especially between August and September, besides the pressure of the high supply in 2018/19, the exchange rate and the opening of the first flowers of the 2019/20 crop also affected quotes. In general, the good rain volume in the second semester of the year favored the development of the 2019/20 season.
Due to price drops at the beginning of the second semester, arabica coffee was traded below 410.00 BRL per 60-kilo bag in September. In that month, the CEPEA/ESALQ Index for arabica coffee type 6 (delivered in São Paulo) averaged 411.72 BRL per 60-kilo bag, the lowest since January 2014 (values were deflated by the IGP-DI from November/18). In October, however, international and domestic values rose sharply, encouraging players to return to the market, increasing the number of trades.
In the partial of the 2018/19 season (from early July/18 to December, 17, 2018), the Index averaged 430.82 BRL per bag, moving down 12.6% compared to that in the same period of the 2017/18 crop, in real terms.
Robusta
Weather conditions remained favorable for robusta coffee, helping both production and quality in 2018/19, in Espírito Santo and Rondônia. The good amount of rains increased the productive potential of the 2019/20 season, resulting in one more year of price drops.
As observed for arabica, the lowest monthly average in 2018 of the CEPEA/ESALQ Index for the robusta type 6, screen 13, Espírito Santo State, was registered in September, of 316.56 BRL per 60-kilo bag – and the smallest average since July 2014. In the partial of the 2018/19 crop (July/18 to December, 17, 2018), the Index averaged 325.06 BRL per bag, downing 23.3% compared to the same period of the season before.
Exports
The record production in 2018/19 boosted Brazilian coffee shipments. According to Cecafé, in the partial of this season (July/18 to November/18), total exports (green beans, ground, roast and soluble) amounted 16.7 million bags, and considering green coffee shipments (arabica and robusta), the total was 15.1 million bags, increases of 31% and 33%, respectively, compared to the same period of the 2017/18 season.
The revenue totaled 2.2 billion USD in the five first months of the season, increasing only 7.6% in relation to the same period of the season before, a result of the international price drops of coffee. In the Brazilian currency, due to dollar valuation in 2018, the total was 8.8 billion BRL, 30.8% up in the same comparison.
