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Brazilian coffee monthly update: December 2024

17 December 2024 17:38 RaboResearch

Read about exports, prices, weather, stocks, and crops in our latest update about the Brazilian coffee industry.

Rabobank

    In November, Brazil exported 4.7m bags (60kg) of coffee. Although this is a 10% decrease from the previous month, it is 5% higher than in November 2023. From January to November, the country exported 46.4m bags, a 32% increase compared to 2023. Despite this exceptional performance, Cecafé’s latest report highlights logistical challenges at Brazilian ports, which resulted in 1.7m fewer bags being exported between January and October 2024. In December, the barter ratio continued to decline to its lowest level in 13 years (since the beginning of our analysis), requiring 1.2 bags of green coffee (60kg) to buy 1 metric ton of fertilizer (blend 20-05-20). This value is 44% lower than in December 2023, when 2.1 bags of coffee were needed. Despite rising fertilizer prices, driven by the increase in urea, coffee prices surged, improving the barter ratio for producers. Coffee prices in Brazil saw a strong increase in November and December. As of December 16, the average price of arabica coffee rose by 112% in 2024 (January to December), reaching around BRL 2,100/bag (60kg). Meanwhile, Brazilian conilon is now sold at over BRL 1,800/bag, up 116% in 2024 (January to December). Several factors are influencing the market, including logistical issues, the Red Sea conflict, supply limitations, and uncertainties regarding EUDR and US tariffs. However, the uncertainty about the extent of the 2025/26 Brazilian crop failure is gaining more attention. Significant discrepancies in estimates among market players are raising concerns about the availability of Brazilian coffee in 2025 and increasing volatility, which is expected to continue in the coming weeks. The rise in green coffee prices is adding pressure on Brazil's local industry. While arabica and conilon coffee prices increased by 112% and 116% in 2024, respectively, supermarket coffee prices rose only 27% from January to November, according to the Institute of Agricultural Economics (IEA). This suggests that local roasters have been absorbing these cost increases, either by reducing margins or through hedging strategies. Local reports indicate that retail coffee prices are expected to rise by 15% to 20% in the coming weeks, which will test the resilience of Brazilian consumers. Rabobank estimates a 0.7% increase in Brazilian coffee demand for 2024/25 (July-June), reaching 21.8m bags (60kg). In November, most coffee-growing regions experienced above-average rainfall, except for Manhuaçu (Minas Gerais) and Alta Floresta (Rondônia). Despite good flowering, fruit set was far below expectations, especially in Alta Mogiana (São Paulo) and Cerrado Mineiro (Minas Gerais). We will need to wait until February/March to assess the impact. In December, rains continued in most of the coffee belt, except for the conilon region of Espírito Santo.

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