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Brazilian coffee monthly update: November 2024

25 November 2024 12:08 RaboResearch

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

Rabobank

    In October, Brazil exported 4.9m bags (60kg) of coffee, setting a record for the month. This represents an increase of 8.1% MOM and 11.6% YOY. Year-to-date, the country has exported 41.5m bags, a 35.1% increase over the same period in 2023. According to a report by Cecafé, despite the exceptional volume, logistical bottlenecks continue to limit exports. By September, around 2.1m bags had not been exported. Robusta coffee exports have been particularly notable in 2024, totaling 7.9m bags, a 140% increase compared to the same period in 2023. In November, the barter ratio reached its lowest level in the past 13 years (since the beginning of our analysis). It now takes 1.3 bags of green coffee (60kg) to buy 1 metric ton of fertilizer (blend 20-05-20). This value is 47% lower than last year, when 2.4 bags of coffee were needed. The significant increase in coffee prices in recent weeks, along with low fertilizer prices due to reduced demand, has favored the barter ratio. It is worth noting that the escalation of the conflict between Russia and Ukraine poses a risk of fertilizer price increases. So far, the market has not reacted. After domestic coffee prices were pressured in October due to the arrival of rains in Brazil, the start of the Vietnamese harvest, and the postponement of the EU Deforestation Regulation (EUDR), coffee prices have shown strong appreciation in November. With the Brazilian real depreciated, average arabica coffee prices rose 11% compared to October, reaching levels above BRL 1,900/bag. Meanwhile, robusta coffee prices increased by 7%. Following an exceptional flowering in most arabica coffee-producing regions, uncertainty about the setting of the flowering raises significant concerns about the production potential for the 2025/26 crop, especially considering the long dry and hot period that affected arabica coffee regions in 2024. USDA data indicates very low carryover stocks in 2024/25, around 1.2m bags. This, combined with uncertainty about the next Brazilian harvest and geopolitical factors such as shipping disruptions in the Red Sea, potential US tariffs, and the EUDR, could lead to price appreciation. Amid this uncertainty, farmers are choosing to sell only what is necessary, thus limiting the coffee supply in the local market. After a long dry period, significant rains returned in October, especially in arabica coffee areas, leading to excellent flowering. In November, good rains continued. However, concerns are growing about the setting of this flowering and its effect on 2025/26 production potential, which has certainly been impacted by the long dry and hot period that affected arabica coffee crops until September. Sustained rainfall in the coming months is crucial for fruit setting and development. More rains are expected in the coming days.

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