This origin report looks at Brazil as it exports most of the 2020 crop and looks ahead to what the 2021 crop has in store. The country continues to experience a troubling outbreak of COVID-19, and a haphazard beginning to its vaccination efforts.
The World Market
C-Market Analysis
Source: Tradingview
The coffee futures market showed relatively little movement in the first month of 2021. The lowest daily close was $1.2101, and the highest totaled in at $1.285. This continues the trend of trading between $1.15 and $1.30 which began in November of last year.
Global Coffee Industry Statistics and Analysis
The International Coffee Organization reports a steady increase in the price of Arabica coffees averaging 1.6% growth, while the price of Robusta coffees dropped 1.8%. Global exports have picked up since October, amounting to a total of 31.59 millions bags in Q4, which is a 6.1% increase compared to 2019. Global production is estimated to increase 1.9% this year, including a 5.2% increase in Arabica coffees which will off-set a decrease in Robusta production. However, global demand has not picked up, and the projected surplus is 5.27 million bags. Consequently, it is unlikely that the current price rally will continue throughout the rest of the year as this large Brazilian crop reaches markets.
Source: ICO
At Origin
Harvest in Numbers and Statistics
The harvest in Brazil is always a hot topic as the country’s production and export numbers tend to have a significant influence on the global markets. In 2020, Brazil had a record crop of 68.21 million bags of 60 kg. This record crop is expected to be followed by a large decline of 23% for 2021, with Arabica specifically decreasing 37% against a rise in Robusta of 17%. A long dry spell in 2020 affecting the flowering period, in combination with the typical off-year in the biennial cycle of production, are considered to be the causes for the projected harvest reduction. In the month of January, Brazil’s exports compared to last year dropped sharply by 9.6% while the foreign exchange revenue also came down 14.6%.
Source: Business Recorder, CECAFE
Coronavirus Impact
Brazil has suffered significantly under the impact of the coronavirus, having one of the highest numbers of cases in the world. There have been at least 9,659,100 cases of the coronavirus in Brazil, according to data from state governments. As of the morning of February 11, 234,850 people had died. The country has had a significant role in the development of COVID-19 vaccines, both as a major vaccine producer and with many of the trials taking place in the country. Nevertheless, the roll-out of the vaccination plan has been slow with a lack of supplies to produce the vaccines in-country. Emergency approval of the Astra-Zeneca vaccine was given on January 17, and to date 2% of the population has been inoculated.
Source: CNN, NY Times
Future Outlook for Ally Coffee in Brazil
Considering the projected 20–30% decrease in production for 2021, Ally plans to work on maintaining and developing the relationships that we’ve forged over the past few years in Brazil. This includes investing some time and effort into our own farms to develop strategies for the coming harvests as well as new projects.
As production forecasts continue to project decreased harvest totals this year, now is a good time to begin considering your needs for Brazilian coffees through 2021–22. We’re happy to talk about purchase planning with you and continue to share our insights into the coming coffee year. Don’t hesitate to contact your account manager to start the conversation!