SAO PAULO, Brazil – After setting a nominal record in February, the domestic prices for arabica coffee faded steeply in Brazil in the first fortnight of March, says CEPEA in its latest report. Between Feb. 25 and Mar. 15, the CEPEA/ESALQ Index for arabica coffee type 6, delivered to São Paulo city, dropped by 172.36 Reais per 60-kilo bag (-12%), closing at BRL 1,262.07 (USD 244.87)/bag on March 15.
Domestic price drops reflected the decreases in the future contracts of this variety. With the Russia-Ukraine war, investors liquidated long coffee positions, migrating to other products that ensure higher profit.
Also, there have been major concerns about the demand for the national coffee – since Russia is the sixth largest importer of the Brazilian coffee – and about the effects of the war on consumption.
As for liquidity, sellers and purchasers, who had not been closing deals in late February because of carnival in Brazil, continued away from the national spot market in the first half of March, due to the steep devaluations.
Cepea Robusta prices
Robusta coffee prices faded in Brazil too. On March 15, the CEPEA/ESALQ Index for the robusta type 6, screen 13, Espírito Santo, closed at BRL 758.40 (USD 147.15)/bag, a steep 46.38 Reais/bag down (-5.76%) compared to that on Feb. 25.
The steep devaluations kept sellers away from the market. Domestic price drops reflected devaluations abroad, which were linked to the Russia-Ukraine war and its effects on supply chain, production costs (because of oil valuations) and coffee consumption.
Exports
Brazilian coffee exports increased in February. According to Cecafé, Brazil shipped 3.4 million bags of coffee last month (green beans, soluble and roasted coffee), 1.6% more than that exported in January.
According to agents from Cecafé, this result is positive, considering the offseason and the logistic issues being faced. It is important to highlight that logistics improved slightly last month, however, there are still issues related to room on ships and high freight costs.
Also, the war may hamper Brazilian coffee exports, majorly because Russia is the sixth largest importer of the Brazilian coffee.
