Cepea, July 18 2019 – Players surveyed by Cepea reported the occurrence of frosts in most arabica producing regions in Brazil in the first fortnight of July. Total damages had not been assessed until the end of the fortnight – the first estimates showed only small damages in the biggest coffee-producing regions.
According to Climatempo (weather forecast agency), temperatures were below 0ºC in several areas in São Paulo, southern Minas Gerais and Triângulo Mineiro, leading to frosts.
HARVESTING – The 2019/20 arabica coffee harvesting stepped up in June in almost all Brazilian regions surveyed by Cepea, surpassing half of the production estimated to Brazil, according to collaborators. The dry and hot weather in most part of June favored activities.
Concerning robusta, the 2019/20 harvesting is ending in Brazil. In Rondônia, activities have practically finished. In Espírito Santo, the harvesting ranged from 70 to 80% of the total. Players say activities are likely to end until mid-July.
PRICES – Although coffee harvesting is ending in Brazil, the trading pace was slow in the spot market in the first fortnight of July. Both sellers and purchasers continued retracted, waiting for the impacts of the frosts in the first weekend of July to be released. The first estimates showed only small damages in the biggest coffee-producing regions, which pressed down international coffee prices, keeping agents away from the market. The US dollar also dropped during the fortnight, influencing quotes in Brazil.
On July 15, the CEPEA/ESALQ Index for arabica coffee type 6 (delivered in São Paulo) closed at 430.26 per 60-kilo bag (114.52 USD), 0.9% down compared to that on June 28. As for robusta, the CEPEA/ESALQ Index for the robusta type 6, screen 13, Espírito Santo State, closed at 280.07 BRL/bag (74.55 USD), for a decrease of 4.8% in the same comparison.
2018/19 SEASON – The Brazilian 2018/19 coffee season ended with lower quotes compared to those from 2017/18. Between July/18 and June/19, the CEPEA/ESALQ Index for arabica coffee type 6 (delivered in São Paulo) averaged 422.62 BRL per 60-kilo bag, 14.9% down compared to that in the previous season, in real terms (values were deflated by IGP-DI May/19). As for the CEPEA/ESALQ Index for the robusta type 6, screen 13, Espírito Santo State, the average in the 2018/19 crop was 317.28 BRL/bag, 20.1% down in the same comparison.
International devaluations for both arabica and robusta sharply pressed down quotes in Brazil in 2018/19 – international quotes were pressed down by the increase in the global coffee supply, due to both the record crop in Brazil and high production in Vietnam and Colombia, the second and third biggest coffee producing countries in the world, respectively. For robusta, sharp price drops have been observed since 2017/18, due to the recovery of production in Brazil after a drought and high production in Vietnam.
However, price drops were limited by high dollar levels during the 2018/19 season. The US dollar averaged 3.862 BRL in the 18/19 crop, against 3.308 BRL in the previous (2017/18). As a result, the CEPEA/ESALQ Index for arabica coffee averaged 106.86 USD per bag, 21.1% below that in the previous season. On the other hand, the US dollar appreciation boosted production costs, especially for fertilizers.