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Harvesting of 2019/20 coffee crop starts to step up in Brazil, reports Cepea

Conab

SAO PAULO, Brazil — The harvesting of the 2019/20 crop has started in all coffee-producing regions (arabica and robusta) in Brazil, says Cepea in its latest report. Although activities started earlier this year, the amount of coffee from the 2018/19 season available in the market in April was significant, according to Cepea collaborators. Some volumes of the coffee remaining from 2018/19 have been sold, according to growers’ needs of cash flow.

In general, however, liquidity was low in the Brazilian market last month, since prices are at lower levels (near or even lower than production costs) in both the domestic and the international markets. As the harvesting of the 2019/20 crop steps up in the coming weeks, agents expect a higher number of deals to be closed in the spot market, since growers will need cash flow to pay for fieldwork.

FRANKE
Kaffeeverband

Prices

Occasional deals were closed in the spot market of both arabica and robusta coffee in April. As for arabica, agents also reported some future trades (2020/21 and 2022/23 crops). With international price drops for both varieties, the few sellers in the Brazilian spot market retracted, lowering liquidity even more – for arabica, quotes were similar to the minimum levels observed 13 years ago.

According to Abic (Brazilian Association of the Coffee Industry), prices should continue at low levels in the coming months. Although lower coffee prices pressed down production costs at processing plants, agents worry that lower revenue may hamper crop management. For Abic, the output in 2019/20 should be around 54 million bags; consumption, in turn, may be high, but it should not surpass that in 2018, at 21 million bags, which, in turn, was 4.8% up compared to that in 2017.

On April 30, the CEPEA/ESALQ Index for arabica coffee type 6 (delivered in São Paulo) closed at 386.67 BRL (98.67 USD) per 60-kilo bag, 1.6% down compared to that on March 29.

Concerning robusta, the CEPEA/ESALQ Index for the robusta type 6, screen 13, Espírito Santo State, closed at 284.26 BRL (72.53 USD) per 60-kilo bag on April 30, 6% down in the same comparison.