NOV 29–BREAKING: Brazil’s Fundacao Procafe on Tuesday said the next 2017-18 coffee harvest from the world’s largest coffee grower will yield a MAXIMUM of 41.5 million 60-kilogram bags due to the multiple factors of stress to trees from years of prolonged drought, frost and reduced branch growth in many regions, and to the stress of the biennial cycle in the regions that recorded a good crop in the 2016-17 cycle. In a brilliant and detailed presentation Procafe CONFIRMS every single detail and factor negatively impacting the next crop as reported by SPillingTheBeans during the past six months and reach the same conclusion, calling for a dramatic drop in production in the next harvest of between 8 to 13 million bags, to reach a range of 36.5 to 42.5 million bags.
*See the full analysis by SpillingTheBeans’ here below.
See the full presentation by Procafe here: http://www.redepeabirus.com.br/redes/form/post?topico_id=65204
NOV 7, 2016–The world’s largest coffee grower and exporter Brazil is unlikely to see a harvest of above 41 million to 43 million 60-kilogram bags in the next 2017-18 crop cycle, for which flowering started at least 2 to 4 weeks late in most producing regions, SpillingTheBeans said on Monday. This compares to what by most evaluations was a crop of between 48 million and 49 million bags in the current 2016-17 harvest cycle, SpillingTheBeans’ author and independent coffee analyst Maja Wallengren said. See the detailed explanation here below;
SpillingTheBeans regularly get comments and questions from Followers, and on Monday — as the current stunning rally in Arabica prices in New York continued — one of these questions read:
“Hi Maja, Now that it’s Game On, can you comment on the expected Biennial cycle in Brazil. What are your expectations for the percentage decline in Arabica production based on experience. Please be sure to factor in all the positive factors that producers can take to reduce the impact with the huge price incentives that exist. Your input much appreciated! M”
“Hi Morris, always appreciate hearing from you and Brazil’s Biennial cycle is certainly becoming more interesting as the current rally is evolving. I will stick to my comments and views based on what I witnessed first-hand during my extensive crop trip to Brazil back in May and repeat that plant health is not as good as expected in many regions across Brazil’s producing landscape.
We have drought damage from the last 2 to 3 crop years still affecting branch growth in Arabica farms; We had frost damage that we know will hit a lot of key areas across Southern Minas in the next cycle; We have ongoing damage in Espirito Santo — plus the fact that the damage to the Conilon (Robusta) harvest there has been proven to come in along the most negative end of the scale in predictions, and after 3 to 4 cycles of consecutive damage it makes it impossible for trees and plantation to recover to any significant production level, even if good attention, fertilizer and other inputs are provided; We already know that flowering for the next harvest came late in many parts of Brazil, AND on top of all that we still have the impact of the biennial cycle, which we can expect to see big and large in regions such as Cerrado which was one of the only regions in which a bumper crop did materialize this year.
In Cerrado, for instance, my sources tell me that given the size of the harvest this year they expect between 20 and 30 percent less next year, so that is potentially 2 million bags LESS in the total figure alone from Cerrado.
All in all, that means — and I am really playing along with the most bullish sentiment as far as production potential is concerned — IF weather is GREAT and trouble-free (which it rarely never is), and IF there is less crop damage from all the multiple problems, and IF the robusta crop in Espirito Santo is able to make any level of recovery, then in an extremely optimistic estimate we would only look at the crop being down 10%-15% on the year. The fact is, however, that figures across Brazil point to a minimum drop between 15%-20% and in the areas which experienced the highest yields in the current crop that drop rises to 20%-30% in the next harvest.
Add to this the latest figure from the Cooxupe Cooperative, which is projecting that the Arabica crop alone in Minas Gerais (including the Cerrado region) will drop a full 6 million bags to between 17 and 18 million bags, and we are fast approaching a figure which at the most will reach 42-43 million bags. And that is BEFORE we include the Arabica harvest in other states like Sao Paulo, Bahia and Espirito Santo where the biennial factor for sure will bring figures down by an additional minimum 1.5-2 million bags.
I still do not believe we have reached over 49 million bags in the current cycle, and will stick to my earlier figure for the 2016-17 harvest closing at 48M-49M range. Based on this we are preliminarily — pending on the final flowering results and prior to any further weather interruptions to the cherry development and bean formation period — I will put my preliminary forecast for Brazil’s next 2017-18 coffee harvest at between 41 million and 43 million bags.
Finally, we have to bare in mind that if any, even just somewhat significant weather problems return to Brazil, whether it be overall dryness during the bean formation period, drought, excessive rains or frost, that kind of trouble could push the figure for the next harvest below 40 million bags.”
*Oh, and P.s., don’t forget that we have ZERO stocks left in Brazil since around June 2016, so come January 2017 — when we are still only half-way through the 2016-17 cycle — there will be nothing for roasters, importers or hedge funds to use as a buffer against lower exports. This is not the time for anyone in the market to stay short!
Your thoughtful and thorough analysis of the biennial situation in Brazil is very much appreciated. While many offer opinions about coffee production few have even seen a coffee tree or have any type of experience in the field. Your extensive experience with the coffee plant in every coffee growing region in the world is unmatched and it would be foolish for anyone involved in the coffee trade to not pay attention to your comments!
Potential for extreme bullishness exists if mkt continues to trek higher, putting a squeeze on commercial shorts on forward selling. It could become a financial problem to keep up with margin calls. There is also a limited exposure to this type of selling.