Brazilian Coffee Monthly Update: August 2023
Read about exports, prices, weather, stocks, and crops in our latest update about the Brazilian coffee industry.
Download the full report
• Between January and July 2023, Brazil exported 19.2m 60kg bags, 15% lower than the same period in 2022. However, July witnessed a rebound, with exports reaching 3m bags – up 13% MOM and 19% YOY.
• Notably, Brazilian conilon exports skyrocketed by 119% MOM and 245% YOY in July 2023, totaling 505,000 bags. The present competitive advantage of Brazilian conilon, driven by better differentials and increased conilon availability, underpins these export gains.
• From now on, an improvement in total shipments is expected as the new 2023/24 Brazilian crop starts to be fully processed.
• In August 2023, the spot barter ratio reached 2.8 coffee bags (60kg) per metric ton fertilizer, a 10% MOM increase but a 12% YOY decrease. The deterioration is attributed to coffee price reductions coinciding with heightened fertilizer costs, especially urea. However, it's worth noting that the current barter ratio remains favorable compared to the last five years. This suggests an opportune period for producers to purchase fertilizer.
• In July, local arabica coffee prices (CEPEA) plunged 38% YOY, while conilon prices slipped 9% YOY. The excellent progress of the 2023/24 Brazilian harvest is exerting downward pressure on arabica coffee prices. In contrast, the increased domestic demand for robusta coffee, the global competitiveness of Brazilian conilon, and rising ICE London international prices continue to shield local conilon prices from following arabica's drop. So far, August has witnessed a modest price recovery, with arabica rising 3.4% MOM and conilon edging up 1.2% MOM.
• In July, unusually heavy rainfall was noted in four regions (Franca/SP, Manhuaçu/MG, Brejetuba/ES, Linhares/ES), especially in Espírito Santo state. Despite the recent rainfall, the coffee harvest is progressing smoothly without major problems. Private analysts project that the arabica harvest has reached 75% as of August 8, a 3% increase compared to the same period in 2022. Slightly wetter conditions raise concerns about early flowering, yet no significant occurrences have been reported thus far.
• Rabobank forecasts the Brazilian 2023/24 crop at 66m bags (60kg), of which 42.7m is arabica. It represents an increase of 9.8% and 15.4% for total and arabica, respectively, compared to 2022/23.
