Brazilian coffee shipments speed up

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Coffee shipments from Brazil reached 4.3 mln bags in December, according to Secex. This corresponds to an increase of 30% compared to the same period last year. The acceleration of shipments in December improves performance throughout the 23/24 season (Jul/Jun), with accumulated shipments between July and December totaling 22.48 mln bags. An increase of only 4% compared to the same period last season. This slower-than-expected flow of shipments over the season, associated with the larger crop, reinforces the idea of higher stocks in the producers’ hands, particularly of arabica coffee. This must be taken into account in selling strategies, especially when aiming at the transition period between seasons.

In 2023, coffee shipments totaled 38.7 mln bags, and revenue reached USD 7.99 bln. Secex data indicates declines of 1% in volume and 13% in revenue compared to 2022. The official numbers were slightly below Cecafé’s indications, which indicated coffee shipments in 2023 at 39.2 mln bags. Highlight on conillon exports, which totaled 4.7 mln bags, which corresponds to an increase of 212% over the 1.51 mln bags shipped in 2022.

The differentials between Brazilian coffee at FOB Port have different behaviors. While good cups have weaker export bases, offsetting gains in the NY benchmark, fine cups gain value due to the stronger withdrawal of sellers. In turn, weaker cup arabicas, from the so-called group 2, gain relative value in the face of external buying interest. The hike in the price of robusta shifts demand to arabica, which has resumed the interest in weaker arabica cups, such as Rio. This movement is largely concentrated in destinations in the Mediterranean and Middle East.

In the indications for the new crop, the differential is slightly wider. MTGB good cup, for example, is indicated for shipments in the first half of the year at -17 cents against ICE US. The idea for shipment during the second half of 2024 (24/25 crop) ranges from -18 to -19 cents FOB Santos.

(grafico – diferencial arábica FOB Brasil) Conillon coffee is trading at -5 cents against ICE Europe converted into cents/lb for shorter shipment. The weaker differential partially compensates for the hike in robusta prices at the London terminal. As for new-crop indications, with shipments starting in May, the differential is firmer at around +1 cent against ICE Europe, offsetting, in this case, the decline in the price of robusta for the most distant maturity date on the exchange.