CoffeeNetwork (New York) – According to the latest USDA report, the Agricultural Trade Office (ATO)/Sao Paulo estimates the Brazilian coffee production for marketing year (MY) 2021/22 (July-June) at 56.3 million bags (60 kilograms per bag), green equivalent, unchanged from the previous estimate. The figure represents a reduction of 19 percent relative to the previous season.
Arabica production is estimated at 35 million bags, a 30 percent reduction compared to the previous crop. Most producing areas are in the off-year of the biennial production cycle. In addition, adverse weather conditions have notably affected the production outcome for 2021, such as persistent drought and high temperatures in major coffee growing regions in the second semester of 2020 and below average rainfall volumes up to September 2021. The severe frosts that affected Arabica coffee growing areas in June/July did not significantly damage the 2021/22 crop. CONAB preliminary estimates that 150,000 - 200,000 hectares out of 2.48 million hectares, or 6 to 8 percent of the total area planted to coffee, was affected somehow by the frosts (from minor to major damage). However, the damage affected mostly branches and leaves, not the beans. During the harvest of the Arabica crop, more specifically, on June 30, July 20, and July 30, frosts affected some growing areas in Parana, Sao Paulo and Minas Gerais. There was no major interruption of the harvest because of the frost. Also, approximately 80 percent of the Arabica crop had already been harvested by late July.
Robusta/Conilon production is estimated at 21.3 million bags, an increase of 1.1 million bags vis-à-vis the previous MY. Good rainfall volumes favored major producing states in addition to improved use of good crop management practices and clonal seedlings. Both Robusta/Conilon and Arabica harvests were over in August and September, respectively. Coffee traders report that the bean size and cup quality for both varieties are considered good.
The total area planted to coffee for MY 2021/22 is estimated at 2.48 million hectares, unchanged from the previous estimate. Coffee tree inventory is estimated at 7.51 billion trees, also unchanged from the previous figure. The graph below illustrates the evolution of Brazilian coffee yields since the 2001/02 crop. The Brazilian coffee yield for MY 2021/22 remains unchanged at 28.01 bags/hectare.
In September 2021, the Brazilian government (GOB), through the National Supply Company (CONAB) of the Ministry of Agriculture, Livestock and Supply (MAPA), released the third official coffee production estimate for MY 2021/22. According to the third survey, coffee production is estimated at 46.88 million bags (30.73 million bags for Arabica and 16.15 million for Robusta coffee), a drop of 16.2 million bags compared to the previous crop year (63.08 million bags). The September 2021 coffee production estimate for MY 2021/22 released by the Brazilian Institute of Geography and Statistics (IBGE) shows the production of 2.89 million metric tons of coffee, or 48.1 million 60-kg bags (32.5 million bags for Arabica and 15.6 million for Robusta coffee), a sharp drop of 23 percent compared to MY 2020/21 (62.08 million bags). Both CONAB and IBGE use a different methodology to forecast coffee production than Post and, both are consistently lower than Post’s estimates. CONAB has worked on the review of the methodology to forecast coffee production since mid-2020.
No official forecast has been announced for the MY 2022/23 coffee production by CONAB or IBGE. However, the initial expectations of a record crop were undermined by the prevailing below-average rainfall volumes up to September 2021 and severe frosts that affected Arabica production growing areas on June 30, July 20, and July 30, notably in Parana, Sao Paulo and Minas Gerais. The frosts are considered by many meteorologists the worse since 1994. As mentioned before, according to preliminary estimates from CONAB, the frosts damaged coffee trees in 150,000 - 200,000 planted hectares, with coffee trees showing from light to severe symptoms. Data is preliminary and subject to change. In addition to the decrease in the area harvested to coffee in 2022, the agricultural yields in the affected areas should also drop. Industry sources forecast that the production potential for Arabica trees have been reduced by 15 and 25 percent compared to the initially projected potential of roughly 50 million bags of Arabica for the upcoming crop. Note that the Arabica trees would mostly be in the on-year of Arabica coffee plants' biennial production cycle.
Consumption Brazil’s domestic coffee consumption for MY 2021/22 is estimated unchanged at 23.65 million coffee bags (22.705 million bags of roast/ground and 950,000 bags of soluble coffee, respectively), an increase of over one percent compared to MY 2020/21 (23.307 million bags – 22.36 million bags of roast/ground and 947,000 bags of soluble coffee, respectively. 0.00 100.00 200.00 300.00 400.00 500.00 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 Jan-19 Jan-20 Jan-21 Price Differential Arabica and Robusta Coffee R$/bag 7 Roast/ground coffee prices have increased significantly since May 2021 due to high costs to acquire green beans, in addition to other production costs such as energy. The graph below shows the evolution of ground/roast coffee retail prices in Sao Paulo, the largest Brazilian city, as reported by Foundation PROCON.
Trade Brazil registered a total of 45.67 million bags during MY 2020/21, reaching a new record in coffee exports for a given MY. The Coffee Exporters Council (CECAFE) reports that the new record reflects the stellar 2020/21 crop in volume, quality, and sustainability. In spite of the logistical obstacles, such as the significant increase in freight costs, successive booking cancellations and the difficulties in rescheduling shipments, commercial and logistical efficiency from Brazilian players have supported record shipments. Brazilian coffee exports for MY 2021/22 are estimated unchanged at 33.22 60-kg million bags, a drop of approximately 12.5 million bags vis-à-vis the previous MY, due to the lower availability of the product and logistical bottlenecks.
Green bean (Arabica and Robusta/Conilon) exports for MY 2021/22 are estimated at 30 million bags, whereas soluble coffee exports are estimated at 3.2 million bags. Major destinations for the current MY include the United States, Germany, Japan, Italy, and Belgium.
Brazil remains very competitive globally, supported by the highly depreciated local currency, vis-à-vis the U.S. Dollar. However, the Coffee Exporters Council (CECAFE) reports that exporters have struggled to get bookings for containers and vessels, as well as have faced frequent loading postponements from shipping companies. There is intense competition among exporters to secure containers and book loadings, all at costly prices. Importers in the main consuming countries such as the United States, Brazil's top client for coffee, are suffering as well, having to manage the disruptions in the supply chain. Additionally, industry sources report that commodities traders are pursuing legal action against hundreds of Brazilian coffee farmers whose failure to deliver on pre-agreed contracts has left the merchants exposed to losses.
Due to weather-related issues, the Arabica price's sharp increase has tempted farmers to default on sales, tightening supply. The three largest Arabica producers, Brazil, Colombia, and Ethiopia, are experiencing increased rates of default, where farmers fail to deliver coffee at agreed-upon prices so they can attempt to re-sell at current higher prices. According to the October 2021 coffee trade statistics released by the International Coffee Organization (ICO), total world coffee consumption for 2020/21 is estimated at 167.15 million bags, an increase of 2 percent from MY 2019/20 (164.02 million bags). Brazil represents over 30 percent of total world exports and approximately 15 percent of world consumption.
CECAFE and the Brazilian Soluble Coffee Association (ABICS) reported total coffee exports during the July-September 2021 period were 8.16 million bags, a drop of 20 percent million bags compared to MY 2020/21 (11.05 million bags). Until November 9, preliminary data shows that coffee export registrations for November 2021 were 606,110 bags, while cumulative green coffee export shipments for November 2021 are 510,128 bags. The tables below include data on monthly coffee exports (quantity and value) for MY 2020/21 (July-June) and MY 2021/22 (July-September), as reported by CECAFE and ABICS.
Stocks ATO/Sao Paulo estimates carry-over stocks for MY 2021/22 at 2.864 million bags, a drop of 501,000 bags compared to the previous season, as a consequence of tighter coffee supply. CONAB has not yet released the 2021 private stocks survey, including stocks held by growers, coffee cooperatives, exporters, roasters, and the soluble industry. Government-owned stocks held by CONAB were virtually zero.
Alexis Rubinstein
