W7 Coffee Update: Record Brazilian Coffee Exports and Optimistic Harvest Forecast Amid Logistical Challenges

Published Feb 23, 2024

In W7 in the coffee landscape, the Brazilian coffee market continues to thrive despite logistical challenges, with record exports and rising prices reported in Rabobank's Feb-24 report. Exports surged by 39% YoY, driven by a remarkable 504% growth in Robusta coffee exports. The fertilizer exchange ratio remained stable, but coffee prices saw upward trends. Meanwhile, the 2024/25 Brazilian coffee harvest forecast anticipates growth, particularly in Arabica bean production in regions like the south of Minas Gerais. Despite regional variations, the total coffee harvest is expected to increase by 4.6% YoY, contributing to a more balanced global supply-demand scenario. Global coffee consumption is projected to grow steadily, indicating a more comfortable balance in the market for the upcoming year.

Robust Exports Amid Logistical Challenges in Brazilian Coffee Market

Rabobank's Feb-24 report sheds light on key developments in the Brazilian coffee market, characterized by record exports, rising prices, and ongoing logistical concerns. Brazil achieved a record high of 3.9 million 60-kilogram (kg) bags of coffee exports, reflecting a significant 39% year-on-year (YoY) increase. Robusta (Canilon) coffee witnessed a remarkable 504% YoY export growth, driven by global Robusta supply constraints, competitive pricing, and increased demand due to recent Red Sea attacks.

The Feb-24 fertilizer exchange ratio remained stable compared to Jan-24, requiring 2.2 bags of coffee for one ton of fertilizer but exhibiting a 5% decrease YoY. Local average prices for Arabica and Conilon coffee increased by 1.7% and 8% in Jan-24, respectively. This upward trend continued in Feb-24, with Arabica and Conilon prices rising by 2.3% and 4.8%, respectively. While recent rains are encouraging, February precipitation remains below the historical average. Limited rainfall in Central America could affect coffee production and the overall supply.

Upward Revision Amid Improved Conditions in Brazilian Coffee Harvest Forecast

The Brazilian coffee harvest forecast for 2024/25 suggests potential growth, driven by favorable weather conditions in certain regions. However, regional variations in production outcomes and ongoing logistical challenges necessitate close monitoring. The anticipated increase in global coffee production, coupled with stable consumption growth, points towards a potentially more balanced supply-demand scenario in the coming year. The total coffee harvest is estimated at 69.4 million 60-kg bags, indicating a 4.6% YoY increase. This upward revision is attributed to improved weather conditions in key Arabica bean-producing regions, particularly the south of Minas Gerais. Despite the projected growth, the harvest is expected to remain slightly below the record set in 2020/21 with 69.9 million bags.

The south of Minas Gerais, experiencing earlier rainfall, is anticipated to witness a potential increase in Arabica bean production compared to the previous year. Conversely, the Cerrado region might experience a slight contraction in Arabica output compared to the previous season. The Arabica harvest is forecasted at 46.2 million bags (+3% YoY) and the Canephora (Robusta/Conilon) harvest at over 23 million bags (+8% YoY).

A more comfortable global coffee balance is forecasted in 2024/25, with the surplus between production and consumption projected to rise from 1.9 million bags in 2023/24 to 4.6 million bags. This anticipated surplus is driven by a combination of factors, including increased production in Brazil and Indonesia, alongside stable harvests in other major producing countries. Global coffee consumption is expected to grow by 1%, exceeding the growth observed in the past two years.