Conab (Companhia Nacional de Abastecimento) made the first estimate of coffee production for the 2023 harvest, predicting a harvest of 54.9 million bags.
Despite the evolution of production this year compared to 2022, when the crop reached 50.9 million bags, market operators did not assimilate this number very well. They expected more.
On the producers’ side, Conab’s number was received as a good size.
Raquel Miranda, technician of the National Coffee Commission of the CNA (Confederation of Agriculture and Livestock of Brazil), says that a larger area and better productivity will allow for this positive evolution of the current crop, raising the production of arabica coffee to 37.4 million bags in this year.
Gil Barabach, an analyst at Safras & Mercado, points out that the market saw problems exactly in the estimate of Arabica coffee production. They believe in a number higher than that of Conab.
One of the signs is that the New York market did not react to the Conab numbers. Price oscillations occurred more for reasons related to the financial market than to the numbers of the Brazilian crop.
Barabach, who is still evaluating the size of the Brazilian crop and, in the sequence, should disclose the numbers expected by Safras & Mercado, says that, without making a value judgment on the numbers already put on the market, the Arabica crop should be greater than published by Conab.
Expecting a greater evolution in arabica production this year, some brokers see the total Brazilian harvest for 2023 with figures in excess of 60 million bags. Conilon coffee production was estimated at 17.5 million bags by Conab.
The CNA technician and the Safras analyst claim that the weather conditions at the end of last year were favorable to flowering, but the realization of the volume to be produced and the quality of the product still depend on the weather in the coming months.
For Miranda, Brazil has evolved a lot in terms of productivity in recent years, reaching a national average of 29 bags per hectare, which is an advantage over international competitors.
She believes in price maintenance in the coming months. There are no prospects of a shrinking demand for coffee; China’s openness supports the world economy; the product scale is not loose; and the dollar is strong, which suggests prices at this current level at least until May.
The analyst predicts, however, a better crop in 2024, despite the many barriers, both in terms of weather and the market, which will need to be overcome by then. With this, the producer has to be cautious and seek mechanisms that guarantee income.
The coffee sector has been going through a period of great numbers. A bag, which averaged BRL 640 for arabica in January 2021, reached BRL 1,483 in the same month of 2022 and remains at BRL 989 this year.
The data refer to the monthly average of prices and are from Cepea (Center for Advanced Studies in Applied Economics). Considering the annual average, the value of a bag of arabica was R$ 1,261 in 2022, up from R$ 962 in 2021. In dollars, a bag went from an annual average of US$ 178, in 2021, to US$ 245, in 2022.
With the acceleration of domestic prices, a reflection of increases due to lower supply and continued demand for the beverage, Brazilian exports from the sector totaled US$ 9.2 billion in 2022, well above the US$ 6.4 billion obtained in 2021 , according to Secex (Department of Foreign Trade). The volume placed on the foreign market by Brazil dropped 7% last year.
The average prices obtained by Brazilian exporters in 2022 were 57% above those of 2021, in dollars. The best coffee prices occurred, however, in early 2022, and few farmers had the product to sell, according to Raquel Miranda. In that period, input costs skyrocketed.
Internally, the rise in prices reflected in the Gross Value of Coffee Production, which, last year, rose to R$ 56 billion, 25% more than in 2021. This year, however, with the slowdown in prices, the production value should retreat 16%, to R$ 47 billion, according to the first estimates of the Ministry of Agriculture.
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