The disappointing start that Brazil’s coffee exports have made to 2022-23 will extend for the rest of the season, landing the country with a second successive season of declining shipments, US officials said.
The US Department of Agriculture’s Sao Paulo bureau slashed to 36.65m bags its forecast for Brazil’s coffee exports in 2022-23, on the country’s July-to-June marketing year basis, taking the figure 2.40m bags below the USDA’s official forecast.
The downgrade also took the figure below the 39.69m bags in exports achieved last season, to the lowest since 2017-18, when volumes were sunk by a hit to robusta coffee production from successive years of drought.
The bureau said that Brazilian coffee supplies remain “competitive globally, supported by the highly depreciated local currency vis-à-vis the US dollar”.
Brazil’s real has weakened by 16.5% against the greenback since hitting a two-year high in April, undermined this month by pledges by Luiz Inácio Lula da Silva, following his election as president, signalled plans for substantial welfare spending.
However, the bureau cut by 1.70m bags, to 62.60m bags, its estimate for the 2022 harvest, on a weaker estimate for arabica output, at 39.8m bags.
“Weather-related issues such as below-average rainfall until September 2021, frosts during June-July 2021 and overall warmer-than-normal weather as of March-April 2022 associated with low rainfall volumes during the winter months have jeopardised the expected initial production outcome.”
Furthermore, the bureau said its revision reflected the “current trade flow, continued logistical bottlenecks and updated information from the industry”.
Brazil’s coffee exports have fallen by 2.2% to 12.29m bags in the July-to-October period, the first four months of 2022-23, according to exporters’ industry group Cecafe, which has blamed the dip on a series of logistical setbacks, besides strong domestic demand for robusta beans.
The market continues to be characterised by “a lower availability of containers, congested ships in ports in the northern hemisphere, mainly in the US and Europe, difficulties in obtaining bookings, cargo rollovers and very high costs, which hinders the work of exporters,” said Günter Häusler, the Cecafe president.
Merchant Atlantica Coffee said on Friday that ships “with an upcoming departure (4-6 weeks) to major US and European ports are already space-constrained, limiting confirmation of new bookings.
“Stocks of food grade containers remain low. Some schedules could not be realised and had to be postponed.”
Beans vs powder
The bureau’s export downgrade reflected in the main a weaker forecast for shipments of beans, cut by 2.0m bags to 33.0m bags, implying a drop of 2.58m bags year on year.
However, the forecast for soluble coffee exports was cut too, by 400,000 bags to 3.60m bags, compared with 4.06m bags last season.
That would represent the biggest year-on-year decline in soluble coffee shipments in 14 years, in percentage terms, and the biggest dip in 37 years on a volume basis.
Brazil’s exports of industrial coffee, of which nearly all is soluble coffee, have made a notably weak start to 2022-23, falling by 9.0% year on year to 1.25m bags in the July-to-October period, Cecafe data show.