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Production is down for the current coffee year.
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Coffee prices spiked in December on word of lower Arabica yields in Brazil.
By Dan Bolton
A severe dry spell that lowered forecasts for Brazil’s Arabica yield in 2021/22 led to a surge in prices to $1.26 per pound (rising 455 points in one day on Dec. 14). The ICO Composite Coffee Price Indicator was $1.10 per pound in November. Harvest totals will decline by more than 1 million 60-kilo bags, according to Rabobank. Analysts predicted a harvest of 37.2 million bags from Brazil, down from 38.8 million bags harvested in 2019/20.
Consultant Judith Ganes-Chase, posting from Brazil, writes that after two days of touring Brazilian coffee farms in southern Minas Gerais, she is "surprised at how bad it looks even after the rain. Coffee trees look green and lush from the road, but flowering failed, and there is little to no fruit." In her view, "maximum best case scenario: 26.75 million bags of arabica. The final will depend on cherry development in the next two months,” she writes.
Production is down overall in South America, according to the International Coffee Organization (ICO). “Production fell by 4.6% to 78.87 million bags and by a similar 4.5% in Central America and Mexico,” writes ICO.
Expect Colombia to continue struggling with labor shortages due to fears of contagion. Prices below the cost of production is compounding concern as there is little to pay coffee workers. African output is stable, and Asia and Oceania countries are up 4.1% to 50 million bags.
Overall, global exports are down 3.8% for the first 10 months of the year, but the shipments are recovering. In October 2020, the first month of the coffee year 2020/21, global exports totaled 9.67 million bags, representing an increase of 3.2% compared to October 2019. Production continues to outpace demand, a trend that continues this year. Production fell 1.6% last year compared to 2018/19, and consumption was down 0.9%.
Stocks globally are adequate. Shipments continue to experience logistical delays following the unprecedented disruption in trade last spring, with a looming crisis over containers' availability at a critical time in the export cycle.