Brazil comes near to losing to Vietnam top rank in coffee exports

13.03.2017

Brazilian coffee merchants restated their ability to meet demand, even as data showed the country, coming close to losing top rank in exports to Vietnam - at least, temporarily - as robusta shipments fell to a multi-year low.

Nelson Carvalhaes, president of exporters' group Cecafé, said that Brazil's ability to ship "close to 2.5m bags" of coffee last month, despite it bringing the carnival holidays "proves our competence to meet demand".

However, the 2.48m bags of coffee which Brazil shipped was the lowest February figure for four years, and down 15.5% from volumes the same month last year, reflecting a slowdown to a trickle in robusta bean shipments.

It also came close to close to being eclipsed by volumes from Vietnam, the second-ranked producing country, which exported 146,402 tonnes (2.44m bags) of coffee last month, customs data showed.

This represented a 23% jump in volumes, despite Vietnam's own trade facing disruptions from holidays, with February bringing the week-long Tet new year celebrations.

'Exceeded all forecasts'

Indeed, the strength of Vietnam's shipments surprised many observers, with trader I&M Smith noting that the data "exceeded all forecasts".

Vietnamese officials had forecast the country's exports last month at 2.17m bags, while trade forecasts ranged from 1.83m-2.33m bags.

The rise in shipments also came without help from Brazil – which had, in the face of a dent to domestic supplies from successive drought-affected crops, proposed importing robusta beans from Vietnam, only to put the idea on hold pending a reassessment of the extent of domestic stocks.

"Maybe if Brazil had been quicker off the mark, it would have been overtaken in exports for last month," a soft commodities trader told Agrimoney.com.

Multi-year low

The tightness of Brazil's robusta supplies was underlined by Cecafe data showing that shipments of the bean had fallen last month to 9.62m bags – a drop of 57% month on month and 86% year on year.

It is also the lowest figure on readily-available data going back to 2012.

Exports of arabica beans were, at 2.22m bags, were down 8.1% month on month and 12.9% year on year.

As for importers, of the 5.11m bags of coffee Brazil exported in the first two months of the year, Germany was the top destination, taking 1.00m bags, a rise of 2.1% year on year, pushing the US into second place.

Exports to the US, at 957,726 bags over January and February, tumbled by 14.6%.

'Resistant to sell

'There is some idea that Brazil's coffee exports for now could snag against a reluctance by farmers to sell.

Cecafe's Mr Carvalhaes flagged that farmers are "resistant to sell at current prices", even though the country's values have been protected by a weaker real from falling New York futures values.

In fact, farmers appear to be betting on further weakness in the real, which boosts the value in local terms of assets such as coffee traded internationally in dollars, I&M Smith said.

There is also talk that farmers are holding off in expectation of a weaker Brazilian harvest in 2017 – an "off" year in Brazil's cycle of alternate higher and lower producing years.

Exports vs domestic demand

However, I&M Smith also flagged resistance to Vietnamese shipments from domestic consumption, "at is steadily increasing and is estimated by some to be approximately 2.8m bags per annum".

Give the disappointing 2016-17 harvest, the need to meet domestic demand "is likely to see Vietnam robusta coffee export volumes start to tail off by May this year".


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