Monday 15 August 2022

Cepea: Harvesting of arabica crops is about to end in Brazil, prices resumed in late August

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SAO PAULO, Brazil – The harvesting of the 2021/22 crops of arabica coffee is coming to an end in Brazil, reports Cepea in its latest analysis. Until August 27, activities had reached from 85 to 95% of the total production. Despite the progress of the harvesting, arabica prices resumed rising in late August. Between July 30 and August 31, the CEPEA/ESALQ Index for arabica coffee type 6 (delivered to São Paulo city) increased by 69.79 Reais per bag (+6.9%), closing at 1,084.23 BRL/bag on August 31.

The valuation of arabica coffee in Brazil was largely linked to the increase of future contracts abroad and the disinterest of Brazilian sellers. In the international market, prices were boosted by technical factors, the dollar depreciation against the Real and perspectives for lower supply in the short and mid-terms in Brazil. Besides the volume below the expected in the 2021/22 season, the effects of the recent frosts and drought on the coming season (2022/23) are still concerning agents.

Robusta Prices

Prices for robusta coffee increased even higher than that for arabica in August. Between July 30 and August 31, the CEPEA/ESALQ Index for the robusta type 6, screen 13, Espírito Santo, increased by 110.45 Reais/bag (+19%), closing at 691.01 BRL/bag on August 31. Still, uncertainties related to the weather are keeping farmers away from the market, and small volumes are being traded.

Valuations in the Brazilian market pushed up prices abroad too. With lower arabica supply, coffee roasters worldwide are increasing the share of robusta coffee in blends, boosting values for this variety.

Agents are also worried about the dry weather, since leaves are falling off some trees, which may lead to flower drops in Espírito Santo and in Rondônia. However, damages on the 2022/23 crop have not been assessed yet, since flowering was small.

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