With lower production in the 21/22 season, prices may be firm this year

Cepea, January 15, 2021 – Coffee production in the 2021/22 season will certainly be lower than that in the current season (2020/21). However, agents consulted by Cepea are still uncertain about how lower the crop will be – crops need to develop for accurate estimates. Besides the negative biennial cycle of arabica coffee crops this year (when production is usually lower), trees were damaged by the hot and dry weather in most 2020, majorly when flowers were opening, in the second semester. These conditions led to drops of flowers and fruitlets.

 

Although rainfall increased in November and December in the arabica and the robusta-producing regions – São Paulo, Minas Gerais and Paraná for arabica, and Rondônia for robusta –, agents consulted by Cepea believe precipitation only limited losses. On the other hand, in Espírito Santo, the weather has been favorable to robusta crops since flowering, and many agents believe production will recover in the 2021/22 season.

 

This scenario has been underpinning coffee prices near 600 BRL/bag since the last months of 2020. The high coffee volume from the 2020/21 season already sold should also underpin quotes until the beginning of the 2021/22 harvesting.

 

Production was high in the 2020/21 season – forecast by Conab, in December 2020, at 63 million bags, and by the USDA, at 67.9 million bags –, but from 70 to 75% of the output (considering arabica and robusta) had been sold by December, according to Cepea collaborators. Besides, many farmers took advantage of the price rises in 2020 to close deals for delivery in 2021, limiting even more availability in the 2021/22 season.

 

On the other hand, consumption has been lower since the beginning of the covid-19 pandemic, which may constrain revenue in 2021. According to data from the USDA from December 2020, the pandemic interrupted the growing demand for coffee, largely because of lower consumption due to the closure of coffee shops and restaurants. According to the USDA, in the 2020/21 season, the world coffee consumption should total 165.4 million bags of 60 kilos each, a slight 0.5% down compared to the 2019/20 season.

 

It is worth to mention that the decrease in the demand for coffee was limited by the increase in coffee consumption at home, which favored majorly robusta and lower quality arabica. Some agents believe that, with this habit change, the demand for fine and gourmet arabica coffee for home consumption may grow in the mid-term.

 

Despite consumption uncertainties because of the covid-19 pandemic, the strong dollar should keep the Brazilian coffee exports high in 2021, at a similar pace to that in the two past seasons, when 40 million bags were shipped.

 

(Cepea-Brazil)

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