BRAZIL—According to a Global Agricultural Information Network report from the US Department of Agriculture’s Foreign Agricultural Service (FAS), Brazilian coffee production has experienced a slight decline to 66.3 million bags (60 kg- bag), green bean equivalent, from the previous 66.4 million bags.

This decrease is attributed to an anticipated reduction in robusta/conilon output, projected at 21.4 million bags.

This marks a 1.4 per cent decrease from the prior estimate of 21.7 million bags and a 6.1 percent decrease from the previous season.

Robusta/conilon is expected to generate 16.2 million bags, reflecting an 11% decline from the previous season.

The decline in production is a result of predicted lower yields due to severe weather conditions during the early stages of the plant’s production cycle.

Factors such as high temperatures caused by the El Niño phenomenon, particularly in the state of Espirito Santo, the leading robusta grower, have contributed to this decrease.

On a positive note, arabica production is anticipated to exceed 44.9 million bags, representing a 12.8% rise over the previous season.

This growth can be attributed to the increased planted area and improved yield, benefiting from favourable weather conditions in contrast to prior harvests.

According to Post sources in the top coffee-producing state of Minas Gerais, farmers are expressing optimism about the 2023/24 crop.

Brazil’s National Supply Company (CONAB) indicates that the total area committed to coffee growing in 2023 will be 2.24 million hectares, with 1.88 million hectares dedicated to crops in production and 362.5 thousand hectares dedicated to crops in development.

Despite the ongoing drought, CONAB estimates a 17% rise in yield compared to 2022.

However, the challenge posed by the current drought is noteworthy, and it may impact the overall coffee production scenario.

The Brazilian Institute of Geography and Statistics (IBGE) forecasts that Brazilian coffee production will reach R$ 48 billion (US$9.79 billion) in 2023, with arabica accounting for 77% of this amount, generating R$ 37 billion(US$7.54 billion) in revenue. However, this represents an 8% drop compared to the previous year.

Meanwhile, robusta coffee, which generated R$ 12.7 billion (US$2.59 billion) in revenue in 2022, is predicted to decline by 12%, yielding R$ 11 billion (US$2.24 billion) in 2023.

The economic challenges are further reflected in coffee prices, with arabica coffee prices in October 2023 at R$ 829.44 (US$ 163.82), considered low for Brazilian growers compared to the average of R$ 1135.50 (US$ 216.44) in the same period the previous year.

Robusta/conilon coffee prices have shown more consistency, averaging R$ 644.41 (US$ 127.24) in October 2023, reflecting a 0.3 percent reduction from the same time in 2022.

Brazil’s total domestic coffee consumption for MY 2023/24 (July–June) is projected to be 22.56 million coffee bags (21.6 million bags of roast or ground coffee and 960,000 bags of soluble coffee).

Simultaneously, overall coffee exports for MY 2023/24 are estimated at 43.85 million 60-kg bags of green beans, slightly down from the previous estimate of 45.35 million 60-kg bags.

This adjustment is attributed to a slower-than-expected trade flow of Arabica coffee at the beginning of this marketing year, influenced by unattractive stock market pricing.

Despite this, exports in 2023/24 are expected to be 22.3 percent higher than in 2022/23, driven by increased output and the depreciation of the real against the dollar, favouring exports.

Brazil exported coffee to 143 countries in MY 2022/23, with the United States and Germany being the primary destinations for green beans, followed by Italy, Japan, and Belgium.

For roasted coffee, the United States was the leading importer, accounting for 29.6 percent of exports, followed by Argentina, Chile, Paraguay, and Mexico.

The report also maintains the forecast for soluble coffee exports in MY 2023/24 at 4.3 million bags, indicating a 10.3 percent increase from the previous season.

Overall ending stocks in MY 2023/24 are expected to be 4.585 million bags, reflecting a 0.8 percent decrease from MY 2022/23 (4.62 million bags), attributed to the anticipation of increased coffee exports in the upcoming season.

On a governmental level, the Brazilian government, through the National Supply Company (CONAB), has implemented policies and programs to ensure that farmers receive the minimum guaranteed price for coffee in case market prices fall below this threshold.

Additionally, the government has put in place measures such as acquiring coffee directly from producers (Federal Government Acquisitions) and providing a premium to buyers for conveying goods from growers to the destination through the Goods Flow Premium Program.

These initiatives aim to stabilize the coffee market and support farmers in challenging economic conditions.