The sales pace has lost momentum in this final season. And it was not for lack of stimulus, given the new price surge. It is the behavior of growers, who had better manage the good moment than adopt a more aggressive posture on the selling side. The losses in Brazil’s 2021 crop, the lack of rain, and the approaching winter justify this stance. This strategy is benefited by the fact that growers are well-capitalized and that coffee prices remain close to the highs.
SAFRAS’ monthly survey indicates that through June 8, Brazilian growers had already sold 95% of the 20/21 crop, up 2% from the previous month. Sales lost a bit of pace, since in the same period last year they were at 96%. They also fall below the 5-year average, which indicates the growers’ commitment at around 94% of the expected output. Arabica has sold 93% of production, while conillon has 99%.
Growers have reduced the pace of sales of Brazil’s 2021 crop. This behavior has been noticed since the beginning of the year but has gained intensity over the last two months. The bad weather caused the fear of not fulfilling the contracts of sales made in advance, and the rise in prices boosted the bullish bets. All this ended up pushing sellers away from the market.
Growers must continue to manage their sales flow, particularly in this transition period between crops. Until the spring and the blossoming of Brazil’s 2022 crop, the market must remain in favor of the strategy of prolonging positions by staggering sales. The recent adjustment in the price level and the gradual advance of new supply in the market have not been enough to change the behavior of sellers, at least not yet.
Until June 8, sales of the 21/22 crop reached 40% of production, according to SAFRAS’ monthly monitoring. The percentage of sales is higher than in the same period last year when 34% of the expected crop had been sold by growers. The sales flow is also well above the 5-year average for the period, which indicates the commitment of around 26%. The justification for this performance is the escalation of prices, which began at the end of last year.
Arabica sales keep standing out, having reached 43% of Brazil’s 2021 crop, well above the average for the period, which is around 27%. This performance is also better than the percentage committed of around 37% at the same time last year. Conillon sales gained more pace last May due to the harvest progress and good demand for conillon both from exporters and local industry. Thus, conillon sales reach 34% of Brazil’s 2021 crop, well above the 27% in the same period last year and the average of 24% until the month of May.