Flashes
12845 views January 6, 2014 posted by Maja Wallengren

HARVEST ANALYSIS: Volcafe Cuts 2013-14 Coffee View For Brazil By 3.8M Bags, Pegs 2014-15 Down To 51M Bags

  Share...
Ecuador2

BY MAJA WALLENGREN

BREAKING NEWS: JAN 6 (SpillingTheBeans)–The next 2014-15 coffee harvest in the world’s top grower Brazil will fall short of expectations and is unlikely to yield more than 51 million 60-kilogram bags, Swiss-UK coffee traders Volcafe/ED&F Man said in a new research note circulated on Monday. A copy of the note was seen by SpillingTheBeans.

Brazil’s current 2013-14 harvest, meanwhile, is now not seen reaching more than 56.2 million bags, said Volcafe, cutting its forecasts for the ongoing harvest by a massive 3.8 million bags. For most of the last year Volcafe has insisted that the 2013-14 crop cycle was going to produce the biggest harvest ever in Brazil, saying and repeating over and over that the current crop was seen yielding as much as 60 million bags.

At SpillingTheBeans we have for the past 10 months respectfully insisted to disagree, saying that erratic weather has caused severe damage to the Brazilian crop on multiple fronts, while the flowering for the next harvest would be in jeopardy because of the 4-year-low prices the market has experienced in the past five months. The low prices have resulted in farm gate prices for producers falling below the cost of production across the world, even among the cost-efficient Brazilian growers who have not been able to keep up with basic maintenance. That combined with continuing weather problems have caused the flowering to not develop at its full potential. SpillingTheBeans has at multiple conferences similarly insisted that Volcafe sooner or later would have to cut its figures and While we still believe the Volcafe-figure for the current year is at least 5 million bags too high, we welcome the news that the trading house has taken steps to adjust their figures.

Volcafe also said a deficit of 5 million bags is expected in preliminary forecasts for the world supply-demand balance in the new 2014-15 cycle, primarily because of expectations for the Brazil crop to drop to 51 million bags after multiple problems to the flowering process.

“We would like to share our field observations with you, as they substantially change the 60 mio figure that we pencilled into the 2014-15 statistical scenario in the November quarterly report released last month. We have found evidence in the field that encourages us to settle on a 51 mio bag crop estimate for the 2014/15 season, with around 35 mio bags of arabica and 16 mio bags of conillon,” Volcafe said in the note.

“This low arabica crop that we have seen over our month-long survey is due to two main factors, one physiological to the tree, and one an economic decision by farmers. We have observed a higher than expected rate of flower abortion. This disappointing fixation of flowers, in particular in the South of Minas, is due to high productive stress from two large crops in a row.”

Volcafe said many farmers also had opted to carry out excessive pruning of trees, taking advantage of the low prices leaving them with less revenue losses doing this additional pruning now. In addition, concerns remain as to how much and how efficiently Brazil’s coffee growers will be able to fertilize given the low prices, said Volcafe.

“In regards to current fertilization, due to the low price of coffee, Brazilian producers need to pay the equivalent of the money received from eight bags of coffee to fertilize one hectare. We will carefully watch farm treatment over the next months. With a 51 mio bag Brazil crop figure, our 2014/15 statistical balance becomes a deficit of around 5 mio bags, coming after two years of statistical surplus in 2012/13 and 2013/14.”

SpillingTheBeans considers this latest harvest update from Volcafe on Brazil to be particularly significant to the market as this particular trading house for years has been known to be the most optimistic of all when it comes to Brazil production figures.

Stay tunded for more news on the coffee market in 2014 and Happy New Year to all!heart

  Share...

Share This Article

11 Comments

  • What’s up, just wanted to tell you, I loved this blog post. It was practical and very well written. Keep on posting!

  • bookmarked!!, I really like your website!

  • Your skills and knowledge are amazing, if only the coffee industry could hope for more passionate writers like you who are not afraid to mention how they believe, that would great. Thank you.

  • Hello there! This is my first visit to your blog! We are a collection of volunteers and starting a new project in a community in the same niche. Your blog provided us beneficial information to work on. You have done an extraordinary job!

    • Thank you so much, I really appreciate you taking the time to write. Good luck with your project!

  • Great write up, and very informative. I’m wondering why the opposite experts of this sector do not realize this. You should continue your writing. I am confident, you have a great readers’ base already!

  • Wow, awesome blog layout! How long have you been blogging for? You made blogging look easy. The overall look of your site is fantastic, let alone the content! And love the subject!

    • Thank you for this very kind feedback! Happy coffee drinking 🙂

  • We will see if the Brazilian rains really mean bigger harvest. It all had to do with how the flowering went in Minas Gerias. I know next year, Brazil’s harvest will explode as it does take coffee a year to recover from the type of drought it suffered last year. Coffee prices have been way down $1.40-1.50, at a time when many Central Americans such as Nicaragua are just having a better harvest. Now the price per pound is at production cost. Farmers still have to pay banks back for the harvest (as harverst cost is usually half of the yearly budget and farmers don’t have that money lying around) and still have to buy fertilizer for the coming months. It’s great for roasters again eg. Starbucks. Ultimatey, only a small percentage of farmers can produce a good specialty coffee > 80 points that will command a good premium +20 or more of C price.

    Furthermore on the deficit and production note, one recent article on Yahoo noted Venezuela used to produce 1,000,000 bags of coffee, much for export. Now that coffee production has all but died, it is now a next importer of coffee, with recent importation. Just recently imported 70,000 bags of coffee from its ALBA compatriot Nicaragua , in exchange for petroleum. Nicaragua sold below exchange grade coffee at $2.25 per lbs to Venezuela. This should take another 1,000,000 bags of coffee off the market this year and the foreseeable future.

  • Wow, you are really doing great with your blog. Congrats

Leave a Reply to Tanja Cancel reply

Your email address will not be published.