Carnival in Brazil while rains return over the Coffee Belt

| March 5, 2014 | 0 Comments

While most Brazilian producers and exporters enjoy the Carnival holidays, rains have fallen with relative abundance over the majority of the Arabica coffee areas.

This is the second rain wave in less than 10 days and will certainly help to interrupt the progressive negative impact caused by the severe drought and low humidity indexes that happened from December 2013 through late February 2014.

The main questions now are:
– Will we lose volume in this 14/15 harvest season?
– How much is the 15/16 crop affected by this drought?

The probable answers are:
– Yes, we will see productivity and bean size reduction in 2014; this is due to lack of bean growth and lack of nourishment to develop beans.
– And yes, we will see a smaller crop starting June 2015, this due to lesser new branch area growth during the draught period in 2014 and the natural lower productivity cycle of the plantations.

How much smaller in 2014 and how much lesser in 2015?
Difficult to predict but as we estimated this year’s crop at about 53 million bags before the drought, a 10% reduction is possible harvesting at best 47.7 million bags in 2014.
For the 2015/16 crop cycle, we see the crop at 40 – 42 million due to lower branch growth/lesser fruits, massive pruning during late 2014 and the natural lower productivity cycle.

Some important numbers to consider:
Brazil’s average annual internal consumption is 20 million bags
Brazil’s average annual exports of green Arabica and Robusta beans is 33 million bags
Carry-over January 1rst 2014 estimated at 9 million bags.

A more accurate harvest volume result can only be known by late October 2014 as coffees come in from the fields and the preparation reveals the weight, size and development of the current hanging fruits.

The flowering season of late 2014 will be the first hint of what the 2015 crop might deliver.

These are still distant figures, high internal consumption and high export volume, allied to a relatively small carry – over, are what have driven the market to where we are today.

Obviously, the known uncertainty about the Central American harvest volume as the Roya impact becomes visible and measurable now in April, is also influencing the market.

Meanwhile, sales for nearby demand have been intense, a big part of the Brazilian Carry – Over is now sold out and there are also massive sales and commitments for the 2014/15 incoming crop.

While differentials for the 2015/2016 crop were more attractive until January 2014, these have now become rare; sellers have withdrawn from offering fearing much lesser supply.

Some Exporters and Coops in Brazil will not sell new crop 17/18 bold beans any longer; Fine Cup and Specialty grade are also becoming a case by case sale.

Hopefully, we will soon be able to report better and more accurate numbers regarding volume and quality, for now, the above expectations are the best we can offer.

On the other hand, we have an excellent assortment of Brazilian NUCOFFEE spot positions in most US ports. We also have some exiting Colombian MCC micro lots in California and MCC Huila Excelso’s in Miami. Call us for samples and pricing.

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Christian Wolthers
Wolthers Douqué

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