COFFEE, NEW CROP 23/24 - THEIR DIFFERENCES CONTINUE

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There will always be disparity between estimates made by public and private agents on coffee production. It's historic. But the unusual difference also places the elaboration of perspectives between global supply and demand in a more “delicate” position due to Brazil's weight on the world stage.

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Brazil's 2023 harvest is being estimated on average, after so many debates and from the most diverse origins, at 67.1 million bags for 2023, compared to 63.2 million bags in 2022.
Total global demand, however, indicates an estimate in 2023/24 of 173.2 million bags, while production is projected at 174.8 million bags.

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If we analyze world demand in relation to world production, little difference is seen in principle.   It occurs that the traditional coffee trader, with his old baggage and experience in this sector, knows that RADICAL CHANGES WILL BE IMPOSED OR ARE ALREADY IMPOSED, forcing the sector to renew itself if it wants to stay alive in this very complicated market.

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In the past we had a giant stock in the hands of the government that helped our industries and the guaranteed price that helped our producer. Nowadays, none of that exists. Therefore, THE MARKET IS FREE! One of the reasons for the great change in the sector, from national industries, to exports.

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Another big change that has been revolutionizing the sector refers to the qualities practiced and currently offered from supermarkets to the most diverse points of the branch. Not to mention the specialty coffees with their sensory booklet derived from the flavors and aromas of wines, our old friends.

Adding to this current requirement that the coffee product requires, plus the enormous behavioral change regarding the economy and politics that is taking place in the world, it becomes a whirlwind of uncertainties for traders surviving in this complicated branch that is this Brazilian GREEN GOLD..

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THE UNCERTAINTIES ALWAYS PRESENT

In the short term, there are still uncertainties regarding the volume to be harvested, especially in Brazil. On the demand side, the world economy registering timid growth and the inflationary scenario are factors that may disrupt coffee consumption throughout the year.

 

For arabica, even with the favorable weather in most Brazilian producing regions in the last months of 2022, many agents are concerned about the volume to be harvested from the variety in the next harvest (2023/24). Although Brazil initially recorded good flowering for the 2023/24 season, the national arabica coffee park still bears the aftermath of the drier than normal last years and the frosts recorded in 2021, which heavily damaged part of the crops.

It is also worth mentioning that 2022 was also marked by high production costs, due to the sharp rise in prices of agricultural inputs, a context that limited the appropriate treatment to recover coffee plantations.  

As for Robusta, the climate scenario and the development of the 2023/24 crop have been a little more worrying than what has been seen for Arabica. This is because the second half of 2022 was drier than in recent years in Espírito Santo and the initial development of the crop showed a high percentage of defoliation, which hindered the setting of flowers and the development of the crop. On the side of demand for variety, the scenario is still positive but not so much, as the latest data has been showing a small drop in consumption here internally. The reasons, the most diverse. No one better than the big supermarkets to answer this question.

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Events that in the past were almost always restricted to the internal coffee market, currently go beyond our borders due to political and economic uncertainties in the world. Just look at Russia, China, the United States, Europe, not to mention South America.

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These uncertainties in the old world are creating a new focus in the coffee market.  The small and lay people are being expelled from the sector and even the multinationals are adapting to this new era, because more once KING COFFEE showed its SOVEREIGNTY  unknown to many.