"Any production below 60 million bags of coffee is insufficient for Brazil," said market analyst Gil Barabach, at an event held this Wednesday (10) by Safras & Mercado. The production estimate for crop 21 of Brazil by the consultancy is 57.10 million bags, considering the biennial year for arabica, the climatic problems registered during 2020 in Minas Gerais and Alta Mogiana / SP and also a recovery in conilon production in Espírito Santo and Rondônia.
According to the analyst, if the numbers are confirmed below 60 million, it should not be an impact only for the domestic market, but mainly for the supply of coffee outside the country. "We are going to lose international market share, we are going to export much less, the transit stock may be lower than that observed in the 19/20 harvest, a really tight scenario", says the explainer.
Compared to the 2020 harvest, a year of record production for Brazil, the figures for the general harvest - considering the production of arabica and conilon, signal an 18% drop in the 21/22 harvest. In the case of arabica coffee, the Safras figures foresee a 30% drop, while the conilon should have an 18% increase, with emphasis on the production area in Espírito Santo and Rondônia.
Gil also pointed out that operators already take into account the break in harvest 21 and that record exports in the 20/21 season favor the formation of stocks with importers, which of course should alleviate the effects of the break in harvest.
In the last week of February the coffee producer observed prices that had not been practiced by the market since 2017. On the New York Stock Exchange (ICE Future US), the market tested the top of 141 cents per pound and of course the movement of high was also registered in the physical market.
Despite the significant drop in the harvest, the analyst attributed the appreciation to a recovery in international prices, which has been taking place since last year, but more slowly when comparing coffee with other agricultural commodities. "We have highlighted the increase in oil, which pulls not only coffee, but which indicates this movement of recovery in world commodities", he comments.
The analyst also explains that the movement is considered a resumption of activities, taking into account the increase in immunization against Covid-19, also points out that the scenario is more optimistic for the second half of 2020. In addition, he highlights the performance of the funds in the formation of record prices. "It was not for coffee, at that moment, to hit 141, but it only hit because it had this intensity of movement of funds within the more optimistic scenario. A more financial movement, than fundamental," he explains.
Prices fell again this week, and the market continues to show volatility. From now on, Gil points out that the producer needs to be aware of three price makers to understand the market, namely: dollar, advance of immunization and the fall in Brazil, considering that last year's production still prevents the most expressive formation in the prices. "On the world stage, the expectation was for a" more nervous "start of the year, the idea is that throughout 2021 the scenario will improve, mainly externally", he adds.
In relation to the factors of low prices, Gil also adds to the list a slower consumption, effect of the pandemic and global surplus estimated in the market at 10.08 million bags. In addition, the formation of stocks abroad ends up being another limiter in the rise in prices. "The market has the shadow of the record harvest in 2020 and a wide offer available," says the expert.
A survey by Safras & Mercado indicates that, up to the beginning of February, 21% of the harvest was already sold. "This abnormal marketing is due to prices. The producer is not selling anymore because he is afraid of the risk of not having coffee, but we see a lot of interest in selling the 22nd harvest," he says.
Next year, at harvest 22, the trend is for a new high-cycle crop for arabica coffee in Brazil. The survey also shows that the commercialization of harvest 22 was between 12% and 15%. "The harvest tends to be big again, not only in the exchange operation, but also in the fixing of prices", comments Gil.
In relation to prices going forward, the expert says that the trend is for a firm market, taking into account the gradual increase in international prices and the fall in the harvest.
He also points out that from now on operators are attentive to the process of grain granulation, harvest and quality of the harvest in Brazil. In the second semester, the focus will be on flowering in Brazil, which was precisely the phase most affected by the lack of rain and high temperatures in the developing season.
With the trend of good prices, Gil points out that the producer needs to be aware of the volatility of the dollar and the New York Stock Exchange, and work within the curve. "The ideal is to dose sales, split lots and take advantage of the good times. Managing the positions available and harvest 21, in addition to being attentive to the opportunities for harvest 22", he concludes.
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