Robusta harvesting starts to step up in RO; arabica prices rise by 11% in March

Cepea, April 2, 2020 – After the harvesting beginning of early crops (2020/21), in mid-March, activities started to step up in Rondônia State (RO) late in the month. According to agents consulted by Cepea, the harvesting pace is supposed to fasten in the remaining areas in early April. Thus, large coffee amounts are expected to arrive at the market in the first fortnight of the month.

 

According to Cepea collaborators, until March 27, around 5% of the total robusta area in RO had been harvested. The beans that are currently arriving at the market have high quality. So far, logistic or labor issues – due to the restrictions imposed by the coronavirus outbreak – have not been reported.

 

In Espírito Santo, coffee growers started to harvest some early crops in late March. In general, Cepea collaborators claim that activities should step up in the remaining crops in mid-April. Opposite to the scenario in Rondônia, part of the agents from Espírito Santo is concerned about labor for harvesting – it is worth to mention that a high number of workers come from other states, such as Minas Gerais and Bahia.

 

BRAZILIAN MARKET – Arabica coffee prices rose sharply in the Brazilian market in March. The CEPEA/ESALQ Index for the coffee type 6 (delivered in São Paulo) increased by 11.3% between February 28 and March 31, closing at 581.56 BRL (111.92 USD)/bag on March 31.

 

The boost came primarily from international valuations for this variety as well as the US dollar appreciation, both influenced by global uncertainties because of the coronavirus outbreak worldwide. On March 31, the American currency closed at 5.196 BRL, a staggering 15.6% up compared to that on February 28. Thus, with higher prices in Brazil, the trading pace increased (mainly for future delivery), but the current scenario is keeping most agents away from the market.

 

It is worth to mention that the supply of arabica coffee is low in the major producing countries, such as Brazil, Colombia and Honduras, where a crop failure is forecast. The coronavirus outbreak worldwide increases concerns about a possible interruption in the world coffee supply.

 

On March 18, arabica futures increased by more than 1,000 points, due to the possible suspension in the activities at Santos port (SP), one of Brazil’s major coffee exports hub.

 

The demand for coffee is forecast to continue firm in 2020, despite the coronavirus outbreak – some estimates point to a 1.5% increase this year. Despite the closure of coffee shops and restaurants, demand is growing in the retail market, once many people have been stocking products, including coffee.

 

ROBUSTA – The international scenario influenced robusta futures too. In Brazil, prices were largely influenced by the US dollar appreciation. Cepea collaborators claimed that higher prices and the strong dollar favored deals for future delivery.

 

Between February 28 and March 31, the CEPEA/ESALQ Index for the type 6, screen 13, Espírito Santo State, increased by 4.5%, closing at 327.02 BRL (62.94 USD) per 60-kilo bag on March 31.

 

For the agents consulted by Cepea, the price scenario for the coming months is still uncertain, since most of the robusta coffee is allocated to the Brazilian market, opposite to that for arabica. Still, many collaborators believe that, with the population stocking products, prices may be underpinned in the coming weeks. However, most uncertainties are related to the harvesting of robusta coffee, which has started and demands labor, which, in turn, may be driven away from activities by the coronavirus outbreak.

 

(Cepea-Brazil)

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