Brazilian Coffee Monthly Update: September 2023

Read about exports, prices, weather, stocks, and crops in our latest update about the Brazilian coffee industry.

- Between January and August 2023, Brazil exported 22.9m bags (60kg), 10% less than the same period in 2022. However, August showed strong monthly and yearly growth, rising 22% MOM and 29% YOY. 

- Brazilian conilon exports remain excellent this year, increasing 82% YOY to 2m bags. August shipments skyrocketed by 41.3% MOM and 443% YOY.

- Three main factors are driving conilon export growth: I) Robusta supply is limited in countries like Indonesia and Vietnam, where concerns about El Niño raise uncertainties about production; II) in Brazil, the price gap between lower-quality arabica and conilon coffee has narrowed, incentivizing the use of arabica coffee in domestic blends and making more conilon available for export; and III) Brazilian conilon has become more competitively priced compared to coffee from other regions, especially Vietnamese robusta.

- Despite a 19% drop in local arabica coffee prices in 2023, September 2023's fertilizer barter ratio is 9% cheaper year-over-year due to lower raw material costs. Currently, farmers need 2.9 bags of green coffee to buy 1 metric ton of fertilizer, compared to 3.2 bags in 2022. 

- In August, local arabica and conilon coffee prices (CEPEA) both increased by 1% compared to the previous month. However, export recovery (given the current harvest), optimistic prospects for the next crop, and global demand uncertainties continue to limit coffee prices. Recent concerns about Brazil's forthcoming warm weather have weighed on prices due to the potential implications for fruit setting and the upcoming flowering season.

- August saw above-average rainfall in most coffee-producing regions. It had no adverse impact on harvest, which is now largely complete. However, it triggered an early flowering, especially in arabica regions. In the upcoming weeks, consistent rainfall is crucial to avoid premature flowering termination due to extended dry and hot conditions that could potentially reduce 2024 production. At least two more flowering phases are expected in the coming months. So far, September rainfall has been below average in most arabica-producing regions.

- Rabobank forecasts the Brazilian 2023/24 crop at 66m bags (60kg), of which 42.7m will be arabica. This represents an increase of 9.8% for the total crop and 15.4% for the arabica crop compared to 2022/23.

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