Porto Alegre, June 30, 2023 – The drier climate favored the progress of the harvest in most of the coffee-growing regions of the country. SAFRAS’ weekly monitoring indicates that until June 27, Brazil reaped 45% of the 23/24 crop, which corresponds to a 6% advance over last week. Work exceeded the same period last year, when producers had reaped 39% of the crop, but it is still below the five-year average of 48%.
The arabica harvest comprises 35% of the expected output, against 31% at the same time last year and 40% on the five-year average. The conillon harvest is 62% complete, above 54% at the same time last year, but still below the five-year average of 67%.
Internal prices melt down following external tumble
Coffee prices in the Brazilian physical market fell again, reflecting the arabica lows in NY. The slight reaction of the dollar only served to soften the external losses. The physical market reflects the progress of Brazil’s 2023 harvest and the greater presence of sellers. With no sign of cold on the horizon, sellers, especially of arabica, have appeared more on the market. Demand remains short, even with the fall in NY and weaker differentials on FOB Santos.
In the south of Minas Gerais, good cup is bidded at BRL 845 a bag for a coffee with at most 15% of defects. Fine coffee costs around BRL 900 a bag, showing more resistance to seasonal pressure. The lower production of Colombian milds must attract buyers for cherry (semi-washed) and Brazilian fine cups, which must result in a relative appreciation of the description. Rio coffee, on the other hand, plummeted and is indicated at BRL 700 a bag in Matas de Minas for batches with up to 20% of defects. The prospect of a moister harvest in the current season must increase the supply of weaker arabica cups, which must result in a relative devaluation of such descriptions. It is already noticeable in the market, by the way, greater aggressiveness of sellers toward such descriptions.
Conillon also fell, more modestly following the arabica losses. Conillon type 7/8 in Colatina, in Espírito Santo, is bidded at BRL 670 a bag. Even with the retreat, it remains valued, finding support in the robusta gains in London and the still high interest from the local industry. But the relative appreciation of conillon, associated with the decline in the price of weaker cups, approached the prices of these coffees. And this has already attracted the interest of the roasted and ground arabica industry. For decision-making, domestic buyers take into account taxes (ICMS), freight, and yield.
Arabica hard cup with 600 defects, intended for domestic consumption, is indicated at BRL 750 a bag. Even though it reduced the difference to BRL 120 per bag, the market is still more favorable to conillon. The advance in the physical supply of new coffee and the increase in the shipped volume must allow for a greater approximation between price indications.
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