Brazil coffee export hopes cut to six-year low, thanks to logistical squeeze

21.11.2017

Brazil’s coffee exports will fall this season to the lowest in six years, US officials said, although stressing setbacks from logistical issues rather than production ideas which have seen some downgrading.

The US Department of Agriculture’s Sao Paulo bureau cut to 30.4m bags its forecast for coffee exports from Brazil, the world’s top shipper, in 2017-18, on a July-to-June basis.

The downgrade took the figure 2.6m bags below the USDA’s official estimate, and would represent the weakest performance since 2011-12.

But while it came as the bureau also cut its estimate for Brazilian coffee production in 2017-18, within hours of a downgrade by analysts at Safras e Mercado too, the reduced export hopes were attributed to setbacks at Santos, the main coffee exporting port, and to a squeeze on shipping availability.

‘Insufficient number of containers’

“Industry contacts report that the main reason for the slow in exports is that the Port of Santos… has faced dredging issues and difficulties obtaining environmental permits,” the bureau said.

“In addition, the number of ship owners with access to the port was recently consolidated, resulting in an insufficient number of containers available, and thus reducing the number of shipping lines arriving at the port.”

According to reports, some shippers are reducing container capacity to northern Europe by up to 20%, with some talk of a reduction in space available to the US too.

Production downgrade

The data follow a weak start to the season for exports, with data from shippers group Cecafe showing volumes for the July-to-October period at 9.65m bags, a drop of 15.7% year on year.

Cecafe itself earlier this month flagged the setback to exports from weather setbacks which had prompted “lower production of coffee”, with robusta output in particular having suffered successive seasons of drought-reduced production.

The USDA bureau pegged Brazil’s 2017-18 coffee output at 51.2m bags, 900,000 bags below the USDA’s official estimate, although remaining well above the 44.78m-bag figure from the country’s official Conab group, which is renowned for conservative coffee estimates.

The USDA bureau put the arabica crop at 38.8m bags, 1.7m bags below the official USDA forecast, “due to worse-than-expected dehusking yields in major growing areas like Minas Gerais and São Paulo”.

The robusta crop was upgraded to 12.4m bags, 800,000 bags above the official USDA figure, “due to better-than-initially-anticipated yields, especially in the state of Bahia”.

Safras revisions

On Friday, Safras e Mercado also cut its forecast for Brazil’s coffee harvest, to 50.45m bags from 51.1m bags, citing setbacks to crop development, which led to small arabica bean size.

The arabica harvest was downgraded by 800,000 bags to 38.8m bags, with the robust crop upgraded by some 150,000 bags to 11.65m bags.


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