Brazilian natural arabica beans led a drop in coffee prices to a nine-month low as benign weather for the South American country’s harvest, and an easing in logistical hiccups, weighed on values.
World all-coffee prices, as measured by an International Coffee Organization indicator, fell by 5.7% last month to 190.82 cents a pound, their lowest since October, the intergovernmental group said.
The decline was particularly acute in Brazilian natural arabica coffee, prices of which dipped by 6.8% to 214.80 cents a pound, as the 2022 harvest, estimated nearly 60% complete by research institute Cepea last week, provided extra beans for sale.
The ICO also underlined improvement in the supply of Brazil’s coffee to the international market, as “the container and shipping issues it faced earlier in the current coffee year continue to be resolved.
Brazilian natural beans are produced mainly in the South American country, although also grown in Ethiopia and Paraguay.
“In May and June, exports of green beans in Brazil increased by 6.2% and 2.3%, respectively, following 10 consecutive months of negative growth,” the ICO said.
Cecafe, the Brazilian coffee exporters’ industry group, last month also noted “modest improvement in global maritime transport” as it reported the country’s June arabica shipments at 2.65m bags, the best performance for the month on available data going back to 2010.
However, Cecafe added that shipping conditions were “still far from normal and with many challenges”.
Brazil-based coffee merchant Atlantica Coffee reported on Friday that “shipping agencies continue to decline to confirm new reservations for departures in August due to lack of space.
“Some destinations already have low availability in September as well.”
‘Beans of high quality’
Brazil’s harvest is being helped by weather which has proved persistently dry and cool in the main south eastern coffee-growing areas – although not cold enough to spark concerns about frost damage to plantations, as the region suffered a year ago.
“The cold front that advances through the south east region causes rain and increases cloud cover only on the coast of São Paulo and on the south coast of Rio de Janeiro,” the CNC producers’ group said on Friday.
“In the other areas of the south east, the sun predominates, it is hot and the humidity levels are low, with no risk of frost in the coming days.”
The conditions are boosting hopes that the harvest, while diminished in quantity by the 2021 frost episodes, will prove of strong quality.
“The current crop has been marked by beans of high-quality beverage because of the dry weather during the harvesting,” Cepea said.
Cepea reported Brazilian arabica prices falling by 4.4% over July to close the month at R$1,300.89 per bag.
Besides harvest pressure, the research institute attributed the decline to recovery in the Brazilian real, which weighs on domestic values of assets traded internationally in dollars, while noting too pressure on New York arabica futures.
“Future contracts for arabica coffee fluctuated widely last month, but, on average, values faded, majorly because of concerns about the low economic growth in China and the fear of a world recession.”