According to Rabobank, the scenario remains uncertain demand despite a lot of support from the depreciating Reais and falling Brazilian supply.
According to Rabobank data released on Monday, March 22, the price of coffee on the New York floor increased 17% last year. These are the results of an analysis performed one year after the onset of the covid-19 pandemic. Compared with other products that increased by 45.1%, coffee growth was worse.
“However, looking at the domestic market in Brazil, the weak Reais exchange rate contributed to a record high of coffee prices in March 2021, with an average price of 740 Reais / bag (60 kg), 33% higher than a year ago, ”says Rabobank.
According to the report, the main factor driving the market up was Brazil’s limited supply during the 2021 coffee harvest. “Every two years”The main production region of the country faces drought and high temperatures during the flowering period, which directly affects crop yield.
Rabobank estimated output in the coming season is 56.2 million bags, of which 36 million bags of Arabica coffee, down about 26.5% from the previous season. Depending on the growth of the plant until harvest, the possibility of further reduction is not excluded. At the same time, the quality of the post-harvest coffee bean is also of great concern due to the uneven distribution of rainfall during the cycle.
Regarding the upcoming harvest in Brazil, the report emphasizes that recent rains have favored the development of coffee beans, as well as helping to restore crops in coffee year 2022/2023. “Weather will be an important factor in the coming weeks for the upcoming crop and the potential for the next season,” according to the report.
In addition to the reduced supply scenario, Rabobank points out that market-related uncertainties remain on the radar of the world. According to the announcement, even with a promising scenario, with the expansion of vaccination, the current limitations in consumer areas such as restaurants, bars … will make the coffee demand drop. decrease in the first half of 2021.
“In addition, Brazil still has sizable coffee reserves from last year’s harvest to supply the market, as well as recent exports and an increase in coffee inventories at ICE – New York. These fundamentals limit coffee prices in the short term. Amid this volatility, the increasing position of Money Management Funds and the uncertainty about demand, Rabobank forecasts New York coffee prices to remain above $ 1.15 / lb (about 1, 25 – 1.40 USD / lb) ”, the report concludes.
Regarding the output of producing countries, Rabobank pointed out that in the current coffee season, exports of Vietnam and Honduras decreased sharply compared to the crop year 2019/2020. “In the current season, Vietnam’s production is estimated at 28.8 million bags and Honduras at 6.2 million bags. On the other hand, the new harvest in Colombia appears to be doing well and is expected to yield around 14.1 million bags for 2020/2021, ”the report said.
Mai Vy (according to the Agrícolas noticias)
