The 2017/18 Brazilian coffee season finishes with a wider price gap compared to the crop before, says Cepea in its latest report. In the average of the season (from July/17 to June/18), the gap between CEPEA/ESALQ Indexes for arábica and robusta (type 6) was 92.96 Reais per 60-kilo bag, and in the crop before (2017/18), 45.52 Reais per bag, in real terms (IGP-DI May/18).
As for the 2018/19 season, which officially started in July, the price gap may continue to increase, mainly because of higher robusta production, which may keep quotes close to 300 BRL per bag.
As for arábica, although the record production can press values in the short-term, expectations of an increase in both domestic and international demands in 201819 and high dollar quotes may underpin prices during the crop.
For lower quality coffee, more required by roasting companies, arábica prices in the 2017/18 season were at higher levels compared to robusta values. In the 2016/17 crop, the gap between type 7 arábica and 7/8 robusta prices was only 7 cents of Real per bag, and, in 2017/18, it changed to 55.98 Reais per bag, in real terms – IGP-DI May/18.
This scenario was verified because robusta supply increased last season, due to the recovery of crops in Espírito Santo and, in 2017, favorable weather conditions limited the availability of rio cup (the production of fine coffee was higher), scenario that sustained quotes in 2017/18. In the 2018/19 season, the quality is expected to be high, which may keep the supply of low quality beans low and price gap between varieties, wide.
In general terms, the 2017/18 season registered decreases for arábica and robusta prices.
For robusta, after two dry seasons, rains in 2016 and 2017 allowed the recovery of crops and advances of production, leading quotes to return to 330.00 BRL per bag levels.
As for arábica, despite the lower production last crop, higher inventories in purchasing countries and expectations of a big 2018/19 season have pressed quotes in Brazil, but at a lower intensity compared to robusta.
The 2018/19 harvesting continues at a good pace in Brazil. For robusta coffee in Espírito Santo, the volume harvested surpassed 60% of the total until last week.
As for arábica, up until now, regions that are more advanced are northwest of Paraná and Garça (SP), with 60% and 50% already harvested.