Saturday 25 May 2024
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Brazil: Safras & Mercado cut their crop estimate to 58.2 million bags

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MILAN – Brazil ’s well-respected agribusiness consultancy Safras & Mercado cut Thursday their estimate for the country’s 2022/23 coffee crop by 2.9 million bags to 58.2 million from a prior estimate of 61.1 million. Safras consultant Gil Barabach said it was particularly difficult to quantify the crop in a year of very erratic production in Brazil, marked by drought, frost, plant abortion, and heavy rain in the graining period followed by low moisture.

S&M said the downward revision was attributable to a lower than expected crop of Arabica. In fact, Arabica production is seen at 35.2 million bags, from a previous forecast of 38.8 million. On the other hand, the estimate for Robusta production was raised to 23 million bags.

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In a separate commentary, S&M’s analyst Lessandro Carvalho pointed out that many traders look with caution at the small Brazilian physical availability.

“For that reason, now they avoid recognizing that the low receipt at cooperatives, the short delivery to trading companies, and the coffee scarcity in trading regions is only a reflection of lower production,” he added.

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“They consider that the delay in the seasonal cycle, with a slower harvest and delayed processing, also helps to explain the lack of available supply. They argue that some growers are holding coffee a little longer, waiting for a better definition of Brazil’s 2022 crop and the market direction.

It is important to emphasize that this September is very important by being the moment when there is the highest percentage of delivery of sales advance of the current crop. And it is undeniable that there is a certain tension in the air regarding these receipts,” Carvalho concluded.

Coffee futures prices ended mixed on Thursday. The ICE Arabica main contract for December delivery closed up 155 points to 216.40 cents, from a 3-week low of 214.85 cents recorded on Wednesday. The ICE Robusta contract for November delivery closed $4 down at $2,226.

Meanwhile, weather forecasts from Brazil are positive. Climatempo said that the coffee-growing areas of Sao Paulo and Minas Gerais will get extensive and regular rainfall from the end of September into early October, which should boost soil moisture levels and promote flowering of coffee trees for the 2023/24 Brazil coffee crop.

In Vietnam, coffee prices stayed unchanged on Thursday from a week earlier, with trading activities to remain subdued until the next harvest season begins in October.

“Both farmers and traders are looking forward to new crop season. No beans left for trading now,” said a trader based in the Central Highlands quoted by Reuters.

CIMBALI

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