Saturday 02 March 2024
  • La Cimbali
  • Triesteexpresso

Arabica coffee futures recede on weaker Real and improved estimates on the Brazilian crop

The Brazilian currency fell to a 3-month low on Monday. The weaker Real encourages export selling by Brazil's coffee producers. Prices were also pressured after Safras & Mercado raised its 2022/23 Brazil coffee crop estimate to 61.1 million bags from a previous estimate of 58.9 million bags. Ice Robusta closed down for the fourth consecutive session

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MILAN – Arabica futures prices receded yesterday, taking their cue from a weaker Real and improved estimates on the Brazilian crop. In New York, the main contract for March delivery lost 245 points to end the day at a one-week low of 189.50 cents, down from 194.20 cents on February 1st – the highest level since late December.

The Brazilian currency fell to a 3-month low on Monday. The weaker Real encourages export selling by Brazil’s coffee producers.

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Prices were also pressured after Safras & Mercado raised its 2022/23 Brazil coffee crop estimate to 61.1 million bags from a previous estimate of 58.9 million bags.

Ice Robusta closed down for the fourth consecutive session. The March contract fell $49 to $3,188, down from an all-time high of $ 3336 reached on January 30th.

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Safras adjusted the 2022 production upward and revised the 2023 numbers. Brazil’s 2023 arabica crop rose from the initial projection of 43.50 mln to the current 43.85 mln bags. This is due to the positive surprise, with crops delivering a little more than expected, writes the leading consultancy in Brazilian agribusiness.

On the other hand, a reduction was made in the size of Brazil’s 2023 canephora (conillon + robusta) crop from 23.15 to 21.70 mln bags, especially with the lower production of conillon in Espírito Santo.

The loss of conillon productivity is justified by periods of dry weather and pest attacks.

For the 23/24 season, a resumption of the flow of Brazilian shipments can be seen, with a highlight on the growth in the participation of conillon, predicts Safras. The projection is that Brazil will ship 44 million bags in the 23/24 season.

Even with good external performance, there should still be plenty of coffee available at the end of the 23/24 (Jul/Jun) business season.

The current scenario indicates stocks above 6 million bags, which indicates a stock-consumption ratio of 29% and brings a more comfortable outlook for internal supply, says Safras.

The addition of large coffee surpluses from Brazil’s 2023 crop associated with the expectation of greater production in 2024, especially of arabica, can lead to negative adjustments in the price curve.

Safras’ preliminary idea is that Brazil will reap nearly 70 mln bags this year, 47 of which will be arabica and 23 of canephora (conillon + robusta).

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