Weather in Central America concerns farmers and pushes up arabica prices in Brazil

Cepea, December 1, 2020 – Arabica coffee prices increased sharply in the Brazilian market in November, reflecting the international valuations for this variety, which, in turn, are linked to the hurricane Iota in Central America. News agencies have reported damages to coffee crops in Honduras, the major coffee-producing country in the region and truly relevant in the composition of certified inventories at the New York Stock Exchange (ICE Futures).

 

Coffee farmers are still assessing the damages caused by the hurricane, but the Honduras Coffee Institute (IHCAFE) has reported that millions of bags, which could be exported, have been compromised. Besides, more coffee batches may be lost because of the floods and logistic issues caused by the hurricane. International agents are also keeping an eye on the effects of the hurricane on the coffee-producing regions in Nicaragua and Guatemala.

 

Concerns about the Brazilian production in the 2021/22 season influenced arabica valuations too. Although rainfall was higher in November, helping crops to recover, farmers believe the drought in previous months may have reduced the productive potential of the coming crop.

 

On Nov. 30, the CEPEA/ESALQ Index for arabica coffee type 6, delivered to São Paulo city, closed at 606.99 BRL (113.39 USD)/50-kilo bag, 12.9% up in the month. This valuation led sellers to the market, and new deals were closed. The dollar closed at 5.353 BRL, 6.87% down.

 

ROBUSTA – Robusta coffee prices oscillated in the Brazilian market in the second fortnight of November, following the trend observed for international prices and the dollar. Still, some deals were closed, primarily when prices were higher. On Nov. 30, the CEPEA/ESALQ Index for the robusta type 6, screen 13, Espírito Santo State, closed at 412.90 BRL (77.13 USD) per 60-kilo bag, a slight 0.22% down compared to that on Oct. 30.

 

CROPS – While agents claim that the robusta production from Rondônia (RO) in the 2021/22 season may be affected by the dry weather until October, in Espírito Santo (ES) – the major robusta-producing state in Brazil –, crops conditions are better. According to agents, rains have been frequent in ES, helping crops to recover and favoring fruitlet settlement. Thus, so far, production in 2021/22 is expected to be higher than that in 2020/21, when, it is worth to mention, the crop in ES was damaged by both the unfavorable weather during flowering and lower crop management.

 

(Cepea-Brazil)

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