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Arabica prices in Brazil held steady in the 1H of 2022, but faded in 2H, says CEPEA

Arabica prices began 2022 on the rise. On February 9th, the CEPEA/ESALQ Index for arabica coffee type 6, delivered to São Paulo city, hit a nominal record in the series of Cepea (which began in 1996) by closing at BRL 1,555.19 (USD 297.93)/bag, while on November 9th, it closed at BRL 930.62 (USD 179.73)/bag, the lowest nominal level since July 20th, 2021. Robusta prices fluctuated widely in 2022 but rises prevailed, due to the higher demand from Brazilian coffee roasters for this variety for coffee blends

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SAO PAULO, Brazil – The Brazilian coffee market has been influenced by uncertainties related to both the scenario abroad and crops in Brazil in 2022 says CEPEA in its new report. In the first semester, the quotations for arabica coffee remained higher than BRL 1,000 per 60-kilo bag, influenced by the Russia-Ukraine war, which worsened the logistic issues that had been observed since the beginning of the covid-19 pandemic and raised the prices of inputs.

It is important to highlight that quotations had already been high, due to low supply, majorly in Brazil.

In that period, investors decided not to trade commodities anymore and began to search for products that are more profitable and with lower risks, which influenced arabica’s future contracts traded at ICE Futures (NY).

Crops

The droughts and frosts from 2021 influenced production in the 2022/23 season – crop failures were confirmed in most coffee-producing regions in Brazil, frustrating agents’ initial expectations for a high output because of the positive biennial cycle of crops.

Data from Conab released in December show that the output in the 2022/23 season totaled 50.9 million bags of 60 kilograms, 6.7% higher than that in the previous crop.

The USDA estimated the Brazilian output of arabica coffee in June/22 at 62.6 million bags, 10.6% higher than that in 2021/22. Farmers have also reported labor issues along the season.

On the other hand, in the second semester of 2022, arabica prices mostly dropped.

Pressure came from an increase in the interest rates and the inflation in the United States and in Europe – which tends to lower demand – and the favorable weather in Brazilian coffee crops, which resulted in large blooming and expectations for a higher output in the coming season.

Arabica

Arabica prices began 2022 on the rise. On February 9th, the CEPEA/ESALQ Index for arabica coffee type 6, delivered to São Paulo city, hit a nominal record in the series of Cepea (which began in 1996) by closing at BRL 1,555.19 (USD 297.93)/bag, while on November 9th, it closed at BRL 930.62 (USD 179.73)/bag, the lowest nominal level since July 20th, 2021.

Robusta

Robusta prices fluctuated widely in 2022 but rises prevailed, due to the higher demand from Brazilian coffee roasters for this variety for coffee blends.

Between July/22 and December 26th, 2022 (21/22 crop), the average of the CEPEA/ESALQ Index (Espírito Santo) for robusta coffee type 6, screen 13, closed at BRL 683.40/60-kilo bag, 5.9% down (nearly 45 Reais/bag) from that in the same period last season – it is important to consider that robusta prices remained higher than BRL 800/bag mostly last season.

The highest monthly average for the robusta Index in 2022, at BRL 828.16/bag – registered in January –, is also the third highest in the series of Cepea, in nominal terms, only lower than the averages from Dec/21 and Nov/16.

Exports

Since the beginning of the covid-19 pandemic, in 2020, the world has been facing logistic issues, such as lack of containers and traffic at ports.

According to Cecafé, this season (July/22-Nov/22), Brazilian coffee exports have totaled 16.05 million bags; considering only green beans, 14.5 million bags have been shipped, 1.7% and 3.4% up from that in the same period of 2021/22. Although shipments have increased, logistic issues limited higher rises.

Considering only arabica coffee, 13.8 million bags have been exported this season, 12.2% more than that in the same period last crop. Robusta shipments have reached 636 thousand bags (until November), a decrease of 62%.

Revenue has totaled USD 3.85 billion, 43.6% higher than that from the same period of 2020/21, influenced by the high valuations in 22/23.

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