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Lower than expected Brazil crop to push prices up: Rabobank

by Staff Writer
March 29, 2016
in News
Reading Time: 2 mins read
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Rabobank’s Brazil 2015-16 survey has indicated that this year’s crop will be lower than expected, pushing prices up this year. Based on a survey of 348 farms, Rabobank estimates that Brazil will produce 51.8 million bags for the 2015-16 season. This will comprise 39.2 million bags of Arabica and 12.6 million bags of Robusta, the report states. “The robusta crop estimate we arrived at is surprisingly low,” the report says. “It is hard to overstate the drought seen in Espírito Santo, the main robusta area, which saw levels of rainfall almost half of the lowest levels seen in the previous 12 years.” However the survey found a relatively healthy Arabica crop, with high productivity in the Alta Mogiana and Cerrado regions, and the bean sizes that are expected to be larger than normal and definitely larger than last year. “Our Arabica estimate is lower than expected, but there may be a reason to use better-than-normal conversion ratios (from litres of cherries to green bean) if rainfall continues to be good until May,” the report states. “If this is the case, we are likely to adjust our estimate upwards by as much as 4 per cent. This, combined with the recent Brazilian real strength drives an increase in our Arabica price forecasts, beyond US$1.30 per pound.” On the Robusta side, Rabobank is predicting large drops in production across a number of the key producers.
“We believe that the large drop in Brazil Robusta production is not totally priced in, and we also expect a drop in Indonesia,” the report says. “Vietnam has been fairly dry over the past season, and the return of the rains is delayed. We fear that, if significant rains do not come back soon, reservoirs will have very low levels to support the flowering, which is the most fragile period for the crop.” Meanwhile, Colombian producers also look to be struggling with dry weather. “Dryness was already a concern last year, but production levels have remained strong, largely helped by good internal prices,” the report says. “Production in the first three months of the 2015/16 crop year was excellent and up 25per cent, year-on-year (YOY), but January-February production was only up 5 per cent YOY. The weather has turned better as of late, but more rain will be needed to support the flowering of the next main crop.”

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