Cepea, January 7, 2020 – After registering low levels most part of 2019, prices for arabica and robusta coffee increased sharply at the end of the year. Up to October, values were weakened, influenced by initial perspectives for high supply in the 2019/20 crop. In general, players were refrained most of the period, trading only when prices were moving up, which occurred mainly in June and September.
In November, quotes started to increase significantly, mainly for arabica. The low supply of high-quality coffee, concerns regarding availability in 2020, firm demand and the strong US dollar justify this scenario.
ARABICA – The CEPEA/ESALQ Index for arabica coffee type 6 (delivered in São Paulo) was below 400.00 BRL/bag in some months. This fact led to an average of 426.95 BRL per 60-kilo bag in the 2018/19 season (from July/18 to June/19), the lowest since the 2001/02 crop, in real terms (values were deflated by IGP-DI).
However, at the end of 2019, the Index resumed closing between 500 and 570 BRL per bag, near the real values registered in early 2017. In the 2019/20 crop (from July/19 to December 30, 2019), the Index average is 454.7 BRL per bag, upping 1.4% compared to that in the same period of the 2018/19 season, in real terms.
Price rises are related to the low supply of high-quality coffee from the 2019/20 season, due to rains and the risk of frosts in June and July. During the development of the 2020/21 crop, new concerns regarding the weather appeared: high temperatures and the low volume of rains led flowers and fruitlets to fall, affecting coffee crops.
The sharp upward trend of quotes in November increased the number of trades in both the spot market (2019/20 season) and for future delivery (2020/21 and 2021/22 crops), leading players to focus on supply in 2020 and reinforcing the trend.
ROBUSTA – Besides the 2019/20 record production in Brazil, the large crop from Vietnam in 2019/20 (30.5 million bags, according to the USDA) has also pressed down quotes.
The CEPEA/ESALQ Index for the robusta type 6, screen 13, Espírito Santo State, averaged 295.90 BRL/60-kilo bag in the partial of the season (from July/19 to December 30, 2019), 13.4% down compared to that in the same period last crop, in real terms.
However, quotes registered increases in the second semester, and the Index returned to the 300 BRL/bag level in November.