A number of completely mis-leading reports started posted figures of the actual cultivated area in Brazil, hence showing complete lack of understanding of BASIC coffee agronomy, because when analyzing the actual potential of the new crop size in Brazil and elsewhere it's CRUCIAL to understand that only the area "in production" matters to output - the total cultivated area include significant % land either in renovation, being pruned or replanted or even in different stages of abandonment!
1. There was NEVER any "bigger arabica crop" or any figures for land "bumped up" as some commentators would like to describe the Conab results - but all on the contrary what the report clearly showed was that the Arabica area "in production" in 2022 is actually DOWN on
last year as a direct consequence of the frost damage. The total Arabica area of coffee in production is registered at 1.431 million hec from 1.433M hec in 2021 and down over 84,000 hec from the record 2020 crop where 1.515M hec were in production. There is WAY too many people and analysts eager to participate in the analysis of Conab figures without actually understanding how these figures work in reality, and without even bothering to take the time to look at them with sufficient attention to detail. In my live feed reporting on the Conab release on Twitter I told followers that the new format was confusing and cautioned people to be careful. Sure, as always with such reports, few in the market DID that and instead rushed to listen to all those "experts" trying to make sense of what clearly was NOT making sense. Basic understanding of coffee agronomy IS important my friends!!
2. WHEN analysing details of production such as Brazil's new 2022 drought and frost battered disaster harvest, and taking a closer look at the ACTUAL figures reported by Conab, a hugely important detail is how graphs in the report clearly reveal the reduction of land "in production" which Conab officials at the presentation made clear was in fact because of the frost damage. When you take a look at the figures it is all the more clear compared to the pattern of how much "newly renovated" land usually is injected into production for an On-cycle in Brazil. It simply did not happen this year, hence another reason for why the 2022 harvest in Brazil is projected to be the smallest for an on-cycle in 8-10 years.
3. This next graph shows with even more obvious clarity just HOW MUCH the size of NEW land has dropped and that is the kind of figure that should ring a very big RED FLAG with anyone concerned about the growing supply deficit and the ongoing struggles for growers in Brazil, especially for a harvest we have yet to see 2-3 months more bean developing and additional growing negative weather impacts on: We have to go 8-10 years back to see an ON-cycle crop in Brazil with NO addition of new land ADDED to area in production as this Conab graph shows clearly revealing frost damage prevented most of Brazil coffee area "in formation" to enter production in 2022 harvest! Conab official at the presentation also made specific reference to this, noting that growth in Brazil's production curve has been set back 8-10 years because of the many destructive weather disasters in the last year.
Finally, there are still a long list of issues that remain to be covered and brought to attention in terms of just where and how big the Brazil crop will develop;
--I have good sources in Brazil and in coffee politics who tell me the actual min-max range for the 2022 coffee crop is 50M-56M bags but Brazil crop forecasting agency was pressured to ONLY release high-end figure. I believe this is credible but also concede it is highly unlikely ever to be confirmed. The fact that Conab decided to change the reporting format of the numbers this time IS lending support to this, because for years and years Conab has always insisted on issuing a Min-Max RANGE and not a singular number until the May update, which makes perfect sense because the bean formation is not formalized until March and first count of actual yields doesn't start to be confirmed until late April for Robusta and mid-late May for Arabica.
--Taking into account the terrible onslaught of flooding and torrential rains with obvious significant negative impact on conilon production in southern Bahia and northern Espirito Santo from mid-Nov and STILL continuing now 2 months later there obviously WILL be impact on both quality and further cut in yields. Again, like it or not, but this is simply basic coffee agronomy!
--A very interesting observation is that of nearly 400,000 hec "in formation" almost none got ready for new 2022 coffee harvest, which makes you wonder just HOW much of this is because of frost losses & whether it will be replanted by end-2022 when new plant material becomes available? And how much of this land will rather be changed to grains crops, as we know already has happened?
--For all those who love criticizing Conab it is worthwhile to point out that since about 8-10 years ago during Roberio Silva's start at ICO corporate interests led by multinationals and U.S. trade groups have pressured Conab - successfully - to raise figures and I firmly believe this is why Conab did NOT release the full min-max this time around. That there are government motives for also not wanting to derail the market more than necessary is a valid point but I would caution everybody to remember that Conab's numbers used to be MUCH smaller than they have been in the last 6-8 years and I do NOT believe this is helping anyone - What helps is actual credible numbers and no one has more people on the ground, highly educated professional agronomists specialized in coffee, who actually carry out detailed and REAL crop visits and evaluation, and one of them told me yesterday: "We know what the reality is and that what is ON the trees is lower" - That would be correct, because that is obvious to anyone who knows coffee. There has for example NEVER been any credible evidence of a robusta crop much above 20M bags, PERHAPS if you are very optimistic there could have been a harvest of 21M but that is entirely speculative. If this had materialized there should be MUCH higher stocks in many places around the world and that coffee is simply not there!! Or alternatively. raise the consumption figure either in Brazil or elsewhere or show us where the warehouses holding 8-10M bags in "disappeared" coffee stocks are!!
*And to those who believe that I am "just a reporter" which is a comment I often hear, while it is true that I started out this way, based between Cambodia and Vietnam since 1993 and among the few to witness the change and growth in Vietnam first-hand since early one - I have during the years conducted extensive self-education into both the economics of market analysis, agronomy and agriculture, macro and micro economics, and since 2018 I have been in the process of studying for a Masters as Agricultural Economics to add academic credentials to my CV and work in practice, and I am excited to recently start on my thesis which will include in situ research in Brazil later this year.
*Having been following comments on this forum since 2013-14 when I first was invited to join I am well aware there are some people here who intensely dislike and criticize my analysis - as I often say on Twitter, if I actually would get all worked up over this I would die of a heart attack so I really don't care and I will rather take this as a flattering indication that some of these people actually believe my comments, various reports and analysis carry sufficient weight for many more people to take them serious, lol!! I also find the notion that I somehow mysteriously seem "to have a following" with many in coffee across the world utterly curious: Why is this so hard to believe, when alone during my 11 years as global coffee reporter for Dow Jones more than 300,000 subscribers worldwide would read my reports on a daily/weekly basis, many of whom have continued to look for my byline ever since in wherever forum I would be speaking or writing?
I have been covering coffee for over 27 years both from the market including 18 years for Reuters, Bloomberg, Dow Jones/WSJ and I have been conducting first hand eye witness reporting and research from over 50 coffee producing countries worldwide, most of which places I speak the language and communicate with growers and exporters myself. This is more than anyone else covering the coffee market and industry today and I rest perfectly comfortably in the fact that I actually know and fully understand even the minor and often invisible points of issues that happen ON the ground at origin and which impacts, or can impact, production and other core fundamentals. Until last year I had remained content just being an observer to what and how many of my reports would be debated on the forum here - after all I am well aware and sincerely grateful to the many participants here who always have come out defending or justifying my reports so THANK YOU for this - but since my 2600-km overland trip across regions accounting for 65% of the Brazil coffee crop last August to survey and inspect frost damage as the first ON THE GROUND in Brazil, I decided that this time around the situation is too important to stay quiet. We are in an unprecedented situation in terms of the supply-demand balance, the growing deficit, dwindling stocks and slowing exports and there simply is not enough stocks to cover this beyond the 2022-23 cycle, and that is only IF there is no more significant weather damage in Brazil or elsewhere. Many of you know where to find me either on twitter or my blog and I am always happy to take questions and get back to anyone writing me.
Happy Coffee drinking everybody!!
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