• Arabica coffee fell 0.3% on the week in New York, closing at US₵ 224.40/lb
• On the London exchange, Robusta prices fell 2.9% to USD 4009/t
• Dollar up 0.6% to USDBRL 5.38 for the week
• Cepea indicator for Arabica coffee rises 1.8% to BRL 1,340.74/bag
• Cepea indicator for Robusta coffee fell 1.6% to BRL 1,193.78/bag
• Brazilian exports up 79.6% in May
• Vietnam saw a 48% drop in coffee exports in May
• StoneX data indicates that 42% of the Brazilian crop has already been harvested
• USDA to release final report on Thursday (20)
• USDA releases estimates for Uganda and Kenya
• Expectations are that the USDA will show a surplus in the balance for 2024/25
With no major changes from the point of view of fundamentals, coffee futures prices were mainly impacted by technical factors. In New York, despite the volatility of the week, Arabica coffee futures ended the week virtually unchanged, with the most active contract down just 50 points (-0.2%) on the week, closing Friday (14) quoted at US₵ 224.40/lb. In London, Robusta futures also ended the week down, with the most active contract falling USD 119/t (-2.9%) and closing the last session quoted at USD 4009/t.
From a macro point of view, the deterioration of Brazil's fiscal scenario contributed to a surge in the dollar on the domestic Brazilian market, which rose 0.6% on the week to USDBRL 5.38 and reached its highest level since January last year. The dollar's appreciation directly impacted coffee prices on the Brazilian market. While New York fell 0.2% on the week, the Cepea indicator for Arabica rose 1.8% to BRL 1340.74/bag. For Robusta, while London fell almost 3%, the Cepea indicator for the variety fell 1.6% to BRL 1193.78/bag.
Weekly intraday (most active contract) - June 10 to June 14
From the point of view of fundamentals, the scenario remains largely unaltered, with the agents' primary focus being the release of the USDA's final report, which will take place on Thursday (20) and provide the agency's outlook for global coffee supply and demand in 2024/25. On Wednesday (19), CoffeeNetwork, a StoneX group company in the US, is set to release its report projecting the global supply and demand balance for coffee. Agents are also keeping an eye on the weather conditions in Brazil and Vietnam. In Brazil, the possibility of the cold waves reaching the coffee belt remains a point of attention, which could support prices and increase volatility. On the other hand, the progress of the harvest and greater availability of coffee on the physical market could pressure prices in the short term.
According to a report released last Friday (14) by StoneX, 42% of the Brazilian coffee crop has already been harvested, which represents a volume of 28.1 million bags, considering StoneX's projection of 67 million bags for the country's crop. Also according to the survey, 56% of the Robusta crop has been harvested, while the progress rate for the Arabica producing regions was 35%. Among the producing regions, Rondônia is the most advanced, with 66% harvested, while Arabica coffee production in Bahia is only 25% harvested.
Also last week, the IBGE released its latest update for the Brazilian coffee crop in 2024/25. According to the institute, the country is expected to produce 61.4 million bags, which represents an increase of 1.7% compared to the previous estimate and an increase of 7.7% from the 2023/24 crop. Arabica production is estimated at 42.3 million bags, which is 7.1% higher than the previous season. For Robusta coffee, the output is expected to rise by 9.1% to 19.1 million bags, reflecting an increase of more than 6% in productivity and almost 3% in the harvested area. The IBGE's estimate is among the lowest on the market, higher only than Conab's projection. StoneX projected the Brazilian crop at 67 million bags (+4.2%) and the USDA estimated production at 69.9 million bags (+5.4%).
Range of estimates for Brazilian coffee production (million bags)
Source: StoneX, USDA and Conab. Design: StoneX.
Last week, Cecafé released data on Brazilian coffee exports in May. According to the council, Brazil exported 4.396 million bags in the month, which represented an increase of 79.6% compared to May 2023. As a result, Brazil's export revenue rose by more than 90% to BRL 5.2 billion. Exports of raw coffee increased by 90.2% to 4.03 million bags, with 868,300 bags of Robusta (+559%) and 3.16 million bags of Arabica (+59%). Exports of processed coffee also rose 11% to 364,800 bags, with soluble coffee being the main product, up almost 12% to 362,300 bags.
In the crop year up to May (July-May), Brazil exported 43.7 million bags, an increase of 32.4% compared to the same period last year. Arabica exports rose 16.4% to 32.9 million bags and Robusta exports rose almost 500% to 7.4 million bags. On the other hand, exports of processed coffee fell 3.3% to 3.35 million bags.
Brazilian coffee exports (million bags)
Source: Cecafé. Design: StoneX.
While Brazilian exports advanced in May, data from Vietnam showed that the country's exports fell significantly in the month. According to data from the country's customs authority, Vietnam exported 1.32 million bags in May, which represents a drop of almost 48% in the country's exports year-on-year. Also according to the report, accumulated exports for the crop year to date, which includes data from Oct/23 to May/24, totaled 19.7 million bags, a drop of 6.43% compared to the same period last year. The fall in Vietnamese exports and the rise in Brazilian exports of Robusta coffee highlights the scenario in which Brazil is taking up part of the space that was previously filled by Vietnam on the international market.
USDA publishes production estimates for two more countries. Consolidated data and global balance to be released this week
Last week saw the release of two USDA attaché reports, which preceded the release of the consolidated figure for all countries and the global balance this week. The highlight was the report from Uganda, the sixth largest coffee producer in the world. The Department estimates a production of 6.9 million bags for the country in the 2024/25 season, which represents an increase of 0.6% compared to the previous crop, which received a slight adjustment, from 6.85 to 6.86 million bags. The country's exports are expected to grow by 0.9%, from 6.5 million bags in 2023/24 to 6.6 million next season.
Another major point was the increase in Arabica coffee's share in the country. Traditionally, Robusta coffee accounts for around 80% of local production, while Arabica accounts for 20%. This year, Robusta is expected to represent only 63%, while Arabica is expected to account for around 38% of the country's production.
The USDA also revealed estimates for Kenya, with the country's production expected to fall by 6.3% year-on-year, from 800,000 bags in 2023/24 to 750,000 bags in 2024/25. The country's exports are expected to fall by 1.3% to 720,000 bags. As a result, the total partial balance of USDA estimates shows a revision of -1.3% for the current season, to 149.7 million bags, with an annual increase of 4.9% to total 157 million bags in 2024/25. Exports, which are practically stable this season after the revisions, are estimated to grow by 3.0% to 124.9 million bags.
The market tends to operate more sideways in the week until the release next Thursday (20). It is worth noting that although expectations for higher production are already consolidated after the release of the main producers, with the exception of Ethiopia, there is a great deal of doubt as to what the USDA will show in relation to consumption. The expectation that the global balance for 2024/25 should show a positive global balance is already well-established among agents, but the market will have to gauge the intensity of this surplus from this week's report.
USDA estimates summary
Fonte: USDA. Elaboração: StoneX.
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