11407 views June 13, 2016 posted by Maja Wallengren

MARKET ANALYSIS: Brazil’s 2016-17 Coffee Harvest Not Seen Over 47M-48M Bags


*JUNE 10–Back from an intense 12-day crop trip traveling 3000 km across Minas Gerais and parts of Sao Paulo, SpillingTheBeans can confirm a crop better than last year in Brazil but we are NO WHERE close to a record or even a big crop. Figures for Brazil’s new 2016-17 crop are RAPIDLY coming down, both because of persistent damage from the last three years drought to Arabica tress, but even more as of late because of massive damage to Brazil’s Arabica harvest ACROSS the key region of Southern Minas where between 30 and 50 percent of the new crop fell to the ground after extreme unseasonal heavy rains. At this point it is very difficult to see the new harvest producing more than between 47 million and 48 million bags. As coffee regions accounting for over 60 percent of the total harvest currently are being hit with frost, the figure may come down further. We are constantly evaluating all the data and information available from across the Brazil’s growing regions and will update the story regularly. Stay tuned!

MAY 4–Brazil April coffee exports PLUMMET a full 21 percent to 2.2 million bags. Full analysis below:

APR 20–May Arabica prices surge 1.80 cent per pound to $1.2765 c/lb in mid-session at the ICE futures exchange in New York on Apr 20 on continuing DRYNESS in Brazil’s coffee regions and stronger Real.


MARKET ANALYSIS: Brazil’s 2016-17 Coffee Harvest Not Seen Over 49M-50M Bags
APR 6, 2016 (SpillingTheBeans)–Brazil’s upcoming 2016-17 coffee harvest is highly unlikely to produce more than between 49 million and 50 million 60-kilogram bags unless a weather miracle will happen. And given the continuing — and continuing increasingly devastating effects of weather because of Climate Change and the El Niiño phenomenon in particular — this makes such a possibility even more remote.

Forecasting a BIG crop in Brazil is pretty simple, because it all boils down to one key fact and one key fact alone:

Whether or not Brazil’s second largest producing state of Espirito Santo will produce a good harvest — and for the past three years, and during the past four crop cycles, this has not happened as Espirito Santo has been hard hit by one severe drought after the other. There is no indication at this point that the outlook is any better for the new harvest and the Robusta crop in Espirito Santo may actually end below last year.

For those few and far between serious coffee analysts who have actually bothered to travel to Espirito Santo to have a look for themselves, or browse through the local weather report from Brazil in Portuguese, it’s becoming even more obvious that a better crop in Espirito Santo is not happening.

It is “hard to overstate the drought seen in Espirito Santo,,” said Dutch commodity analysts Rabobank in a report last month after the agricultural bank’s analysts actually visited the state, adding the bank remains “particularly bullish in robustas” because of the bleak outlook for Espirito Santo.

SpillingTheBeans has for the past several years issued strong criticism of the lack of seriousness that coffee analysts in today’s market give to the situation and understanding of Espirito Santo’s importance to the overall Brazilian coffee crop. The current situation only goes to confirm that exact same error being repeated by most of these analysts who, in the vast majority of cases, are working for investment banks, funds or trade that by no means are objective as they have clear and very visible vested interests in keeping coffee prices low through deliberately manipulating speculations about the real size of the Brazilian crop in the market.


The current situation in Espirito Santo makes the overall forecast for Brazil’s total coffee crop in the new cycle, for which physical harvesting starts in earnest during the last weeks of May, come down to pretty basic math;

–Brazil is on track to get an overall Arabica crop of between 38 and 40 million bags. This is a GREAT harvest by any count and represents a significant improvement from last year’s disaster crop that according to Brazil’s Agriculture Ministry’s crop forecasting agency Conab ended as one the smallest in 10 years at only 43.235 million bags, including 32.05 million bags of Arabica coffee and 11.2 million bags of robusta coffee, also known as “conilon” in Brazil.

–The overall national Robusta harvest, however, may only in the best scenario come in on par with the last crop, with Conab forecasting the Conilon crop to reach between 11.387 million and 12.078 million bags, compared to the 11.187 million bags produced last year. This is PRIMARILY because Espirito Santo — AGAIN — is not recovering from the damage that during the past three years and four crop cycles have accumulated from drought-affected crops.

And on top of that, the market STILL has to remember that Conab released its forecast all the way back in mid-January and having now gone through the entire month of both February and March, we already know that as far as dryness in Espirito Santo is concerned not only has the situation not improved, but it is worse. Having passed through the entire final phase of the period known as the “bean formation” which represents the last chance the beans inside a coffee cherry have to grow bigger has now passed and the month of April is basically when the cherries will ripen before harvesting starts of the Conilon crop. The result is therefore by all counts expected to be a repeat of last year’s disappointing Robusta harvest in Espirito Santo, with not only low overall yields but also a sharply reduced average bean size.

On Mar. 17th local coffee growers in Espirito Santo told the local Brazilian agriculture news agency GrupoCultivar they were concerned about the continuing “lack of rains” in the state, a situation which has been worsened by the government’s restriction of use of irrigation because of overall water shortage for the general population in Brazil’s both urban and rural areas.

“We have a lot of beans that were not able to develop fully,” said Renato Strelow, agronomist with the São Gabriel Coffee Producers cooperative in Espirito Santo, confirming the importance that a lack of rain has had for the new crop to develop the beans. The coop is calculating that 35 percent of the harvest may be lost because of this and related problems from the drought, Strelow told Grupo Cultivar.

The BIG drought in 2014 when Brazilian coffee regions suffered the worst drought in over 70 years

Conab’s forecast for Espirito Santo’s robusta harvest is for the 2016-17 crop to produce between 7.466 million and 7.928 million bags, possibly falling BELOW the harvest of 7.761 million bags in the state’s last Conilon harvest. Average rainfall in the Espirito Santo coffee region of São Mateus from December to February — which is exactly when the bean formation period takes place for the robusta crop in Brazil — were recorded at an average 198.2 milimeters compared to normal levels of 369 millimeters. In the month of February alone, which is the last chance for beans to grow in shape and size, only 8.1 millimeters of rain was registered, said ClimaTempo meteorologist Cesar Soares in the GrupoCultivar report.

In the perhaps biggest Brazilian coffee harvest ever, the 2012-13 crop year, Brazil reached up to between 54 and 55 million bags thanks to a bumper harvest from Espirito Santo alone of some 16 million bags — it is very clear that this is nowhere near to happen this year and hence the 2016-17 coffee harvest in Brazil is unlikely to reach a range above 49 million and 50 million bags. Roasters and Coffee Lovers beware, it’s time to buy coffee!

Oh, and P.s., did we tell you world stocks are near depleted and ICE certified stocks are at 4 1/2-year lows?

Happy Coffee Drinkingheart


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1 Comment

  • Madam Maja,
    You are absolutely right. We know the world is influenced by the digital media,on which the speculation made easier.

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