Brazil’s exports hit new highs, despite low production

Brazil’s coffee exports reached a record high of 36.8 million 60-kilogram bags in crop year April 2014 – March 2015, according to the International Coffee Organisation’s (ICO) latest report. This represents an increase of 12.4 per cent on the 32.7 million bags, exported the previous year. The ICO said a depreciation of the exchange rate, the US dollar brought $2.24 Brazilian Real(R) in April 2014, compared to R$3.21 in March 2015, in addition to Brazil’s domestic stocks fuelled the export growth. “According to Conab, the Brazilian government agency responsible for forecasts, coffee production in 2014/15 came to 45.3 million bags, its lowest in three years,” said the ICO. “With domestic consumption up to around 21 million bags, this would suggest that significant volumes of domestic stocks have been used to supply the market over the last year.” The United States Department of Agriculture’s (USDA) recent report provides insight into Brazil’s exports not counted in the crop year ending March 2015. The USDA reported that on 25 March, Conab held an auction to sell 40,500 bags of Arabica coffee from its stocks. “There was no demand for the product due to the high auction prices set by Conab which reached close to R$500/bag, (US$164/bag) depending on the batch – quite above market prices,” said the USDA. The USDA said that the National Coffee Council and the Brazilian Confederation of Agriculture, which represent coffee growers, complained about the high prices to Brazil’s Ministry of Agriculture, Livestock and Supply (MAPA). The USDA said that after reaching an agreement with the growers, MAPA allowed further auctions to take place. On 30 April, Conab put 40,500 bags to auction and sold 28,500 bags at the average price of R$380/bag (US$125/bag). The USDA said the auctioned coffee was from the 2002-03, 2008-09 and 2009-10 crops. According to the ICO’s April report, Conab estimates Brazil’s production at around 45 million bags for crop year 2015-16. Conab projects Arabica production at around 33 million bags, whereas the robusta crop is estimated at around 12 million bags. The USDA’s Agricultural Trade Office (ATO) forecasts Brazil’s coffee production at 52.4 million bags for marketing year, July 2015 to June 2016. The USDA said members of its ATO in Sao Paulo visited Brazil’s major coffee producing areas to observe vegetative development, cherry set, and fruit formation to assess the 2015 crop. It found overall that good blossoming in September/October 2014 and good weather conditions during October/November 2014 through March/April 2015 ¬¬– except for a dry spell in January 2015 – contributed to the physiological development of the coffee trees, resulting in expected better yields in 2015 compared to 2014. The ATO said strong prices in 2014 contributed to good crop management, which supported reasonable cherry setting and development. The ICO said that with Brazil’s domestic consumption up 250,000 bags compared to the previous season, export availability is going to be significantly reduced over the next year.