The upcoming Brazilian coffee crop is expected to be ‘massively up’ on last year, according to Commerzbank Research.
“The only lack of consensus concerns whether it will reach an all-time high or will fall marginally short of the previous record achieved in 2018/19, which Brazil’s Conab agency puts at just shy of 62 million bags,” said Commerzbank in a note published last week.
“A steep increase is expected in the production of Arabica coffee in particular, which should ease the currently tight physical market in Brazil.
“The last lower Brazilian Arabica crop played a key part in the fact that global coffee production is also likely to be down slightly in 2019/20 and that the balance on the global coffee market is now set to slide into deficit following a solid surplus in 2018/19. That said, this was the crop from a low-yield year in the two-year cycle,” said Commerzbank
“ However, the International Coffee Organization has reduced its estimate of the deficit from 626,000 bags to 480,000 bags, referring to coronavirus as a considerable risk on the demand side.
“It comes as no surprise that exports are also making more sluggish progress than last year. According to the ICO’s latest figures, 8 per cent less coffee was exported worldwide in January 2020 than a year earlier.
“Exports in the first four months since the season began in October 2019 are down by almost 6 per cent. 10 per cent fewer beans were even exported from South America. The shortage of coffee, especially of high-quality Arabica beans, is also lending buoyancy to the price on the New York exchange, which like so many other (agricultural) prices had suffered in late January/early February from the uncertainty in connection with coronavirus.”
[photo: Neil Palmer, CIAT]