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  • MSC, YOUR PARTNER THROUGH COCOA'S JOURNEY

  • MSC, YOUR PARTNER THROUGH COCOA'S JOURNEY

  • MSC, YOUR PARTNER THROUGH COCOA'S JOURNEY

  • MSC, YOUR PARTNER THROUGH COCOA'S JOURNEY

  • MSC, YOUR PARTNER THROUGH COCOA'S JOURNEY

C PRICE TO SPIKE AS BRAZILIAN CROP SHRINKS

C PRICE TO SPIKE AS BRAZILIAN CROP SHRINKS



The price of coffee on the New York exchange could rise further as adverse weather conditions affect the next crop in Brazil.

Sources in Brazil said the next Brazilian coffee crop could now be as much as 15 per cent smaller than forecast as recently as May 2019 by the country’s forecasting agency Conab. That forecast was itself somewhat lower than earlier estimates.

The C price in New York has already risen sharply from a mid-June low of around 94 US cents per pound to around 105 cents and is expected to rise further as a result of a much lower than expected Brazilian crop.

In May 2019, Conab forecast a total of 50.92 bags of coffee from Brazil in the upcoming crop, but if it falls by as much as farmers suggest it could be more like 43/44 million bags.

The upcoming crop is an ‘off-year’ in the coffee cycle. An off-year usually results in a smaller crop, following production of a large crop in an ‘on-year.’

Crop year 2019/20 had been expected to be a relatively large off-year crop, but recent reports have tempered that expectation.

Broker Marex Spectron said it anticipated that the 2019/20 harvest will be smaller and of poorer quality than last year and that there would be fewer exportable grade Arabicas and more off-grades.

Anecdotal reports from Brazil say that, now the harvest is underway, farmers are finding that yields are even lower than expected and bean development is “very poor.”

Jack Scoville a futures market analyst at Price Group said, “I am hearing the same thing, and that is supporting futures. The ICO has some lower production estimates in line with Conab, and those estimates are likely to drop.” He agreed that bean quality is poor this year.

Sources in Brazil said weather conditions had been such that concerns were growing that the next crop after the 2019/20 crop could also be affected and might be smaller than anticipated.

Although the C price has risen and could rise further, there is plentiful supply globally, and it remains at a level that farmers around the world say does not cover the cost of production.

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