Brazil robusta price tops R$500 a bag - amid fears for 2017 crop

20.10.2016

Procafe unveiled a downbeat estimate for Brazilian coffee production next year, foreseeing drops in output of both arabica beans and robusta supplies – which topped R$500 a bag for the first time.

The research group, in its first forecast for 2017 output by the world's top coffee-producing nation, pegged it at 39m bags – a drop of some 20% from the near-49m bags achieved this year.

Procafe has a reputation for conservative estimates - as do the government agency Conab and the CNC producers' group to which it is seen as being somewhat aligned.

Indeed, its forecast for a 28m-32m bag arabica crop next year is well below the 37m-38m bag estimate from Cooxupe, the producers' co-operative giant.

Procafe foresees Brazilian robusta output in 2017 at 8m-9m bags, in line with the 8.35m bags harvested this year, on Conab estimates, and well below the 11.2m bags harvested last year.

However, concerns continue to surround Brazil's drought-hit robusta growing areas, Espirito Santo and Rondonia – worries which indeed fuelled a rise in domestic prices above R$500 a bag for the first time, research institute Cepea said separately on Wednesday.

Arabica vs robusta

Domestic robusta prices, "which have been registering records in Brazilian real terms almost daily since August 18", hit R$507.09 a bag Cepea said, a price representing a 34% increase so far this year.

It also represents a historically small discount to the R$515.06 a bag at which Brazilian arabica beans are selling, according to institute data.

The dynamics reflect the "low offer" of robusta beans in Brazil, after this year's crop was "heavily damaged" by drought in both its main growing states.

"And the expectations are that the next season, 2017-18, will also record low production," leading producers to ration bean sales.

'Crop failure is a conviction'

Indeed, in both Espirito Santo and Rondonia, "crop failure is a conviction for next year," the institute said, noting that growers had been spurred by the poor conditions to consider grubbing their coffee plantations.

In Espirito Santo, many farmers are showing "some interest" in replanting, "if rains are heavy.

"In Rondonia, however… the renewal may not occur, since coffee growers are frustrated with coffee crops."

Arabica prospects

By contrast, in arabica growing regions, farmers have been encouraged by rains this month to "start planning" for the 2017 crop, through actions such as seeking loans and exchanging beans for inputs, Cepea said.

Nonetheless, arabica coffee output is expected to fall in 2017 thanks to it being an "off" year in Brazil's cycle of alternate higher and lower production years.
 

agrimoney

Readers choice: TOP-5 articles of the month by UkrAgroConsult