Brazil’s next harvest is expected to be “normal” compared to the last two, which were seriously affected by the weather, experts say

01/05/2023

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Brazil is in the off-season of a smaller production cycle, and the next one is not expected to be a “super-crop” — Foto: Silvia Zamboni/Valor

With divergent estimates, the real size of Brazil’s 2022 coffee harvest is still unknown. And, even as this is taken into account, coffee prices may face surprises in the first half of the year.

This is because Brazil is in the off-season (January to June) of a smaller production cycle, and the next one is not expected to be a “super-crop,” as international market agents believed.

In the importers’ view, the trees would be rested from bad weather, and the cycle could surprise to the upside. However, nature is responding differently. The 2023 harvest will be good, sources say, but smaller than 2020 — a record year that yielded 63 million bags, and that had been propping up buyers’ expectations.

Analysts are cautious about projections for prices, but some see them going up. “We are in the off-season of a crop that was much smaller,” said Eduardo Carvalhaes, from Escritório Carvalhaes. There is no exact dimension of the shortfall or the stocks in the country.

The Brazilian production of coffee (Arabica and Robusta) harvested in 2022 is projected with a large gap. While the National Supply Company (Conab) indicates 51 million bags, the U.S. Department of Agriculture (USDA) foresees 62 million bags.

For Fernando Maximiliano, an analyst at StoneX, it will be necessary to observe the pace of Brazilian exports in the coming months, a factor that will show the availability of grains and the appetite of the foreign market. This can still affect prices, he said.

The international and domestic prices are on a downward path in the last few months, after an intense price rise that gained strength after the frosts in July 2021. But despite the recent drops, the 2022 annual average in New York, of $2.1283 per pound, exceeds by 25% the average level of 2021, according to Valor Data.

Gil Barabach, an analyst at Safras & Mercados, said that there is usually a mismatch between the foreign and domestic markets during Brazil’s off-season. He sees room for recovery of domestic prices, but the weak demand abroad has curbed increases.

Attention now turns to the first figures for the 2023 harvest, which are expected to be released soon. StoneX, for example, is in the middle of an analysis in the field and will unveil a projection in mid-February.

Sources consulted by Valor from the main producing regions in Minas Gerais say that the next harvest will be, at least, “normal,” if compared to the last two seriously affected by the weather. The harvest is still under development. January to May is the time of grain expansion, a phase that still depends on the weather.

The agronomist Adriano de Rezende, technical coordinator of the Minasul cooperative, the second largest exporting center after Cooxupé cooperative, explains that 95% of the coffee fruit is formed by carbohydrates acquired through photosynthesis.

For the process to run smoothly, rain, adequate temperature, and sunshine will be necessary until May, the harvest time. Only 5% of the carbohydrate arises with the help of fertilizer. According to him, until now, fruit setting (transformation of the flower into fruit) has been a little impaired in the south of Minas Gerais by low temperatures and poorly distributed rainfall.

But both in the Minasul region and in Patrocínio, in the Cerrado region of Minas Gerais, considered stars in the global production of Arabica coffee, the 2023 harvest is expected to exceed the production of 2021 and 2022, and will be below that of 2020.

According to Simão Lima, head of the Cooperative of Coffee Growers of the Cerrado (Expocaccer), productivity is estimated at 32 bags per hectare this harvest, compared to 27 bags per hectare in 2022. Mr. Lima estimated that the region may supply nearly 6.5 million bags, but made it clear that it is still early to determine figures.

The rainfall is favorable in the Cerrado, and an atypical second blooming has occurred in December in some places. With this, there will be coffee beans at different stages of maturity at harvest time, but this is not an alarming factor, he said.

*By Erica Polo — São Paulo

Source: Valor International

https://valorinternational.globo.com/