Coffee Growers have already sold 69% of 20/21 crop

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Foto: (Daniele Jesus/EyeEm/Getty Images)
Foto: (Daniele Jesus/EyeEm/Getty Images)

Growers have already sold 69% of 20/21 crop

The market even looks for a reaction in early November, but the prices reached in early September remain fresh in the growers’ memory. Of course, that ends up helping keep sellers on the defensive, especially if they have already made good sales and have liquidity. Moreover, there is the expectation of a future improvement in prices due to the fall in Brazil’s 2021 crop. So, all this leads to a slower business pace, which should persist until the end of the season. Trading companies also adopt a calmer tone after a hectic start of the business year, which contributes to this prevailing slowness.

The price of the best coffees remains linked to the fluctuation of the dollar and ICE futures. The volatility of the two variables helps keep growers on the defensive. Besides the scope of daily movements, in this post-election realignment in the United States, the gains on ICE are often offset by the dollar lows, which brings balance to prices at the end of the day. In view of all this, growers have preferred to wait a little longer, which impacts on the business flow of both the physical and especially future crops.

The monthly survey by SAFRAS indicates that, until November 10, the commitment of the 2020/21 crop by growers reached 69% of production. Despite a slower business pace, the selling flow remains accelerated compared to the same period last year and also the 5-year average (both with only 62% of production).

Arabica sales reach 70% of production (amid forward sales, exchanges, and physical negotiations). In the same period last year, sales were at 62%, and the average for the last 5 years is 61%. The growers who need liquidity choose to sell lower quality coffees, holding the best cups for future negotiation, betting on better prices with the off-season.

Conillon sales, on the other hand, lost strength. The arrival of Vietnam on the market, despite problems with excessive moisture and delayed harvest, ends up inhibiting new business with Brazilian conillon. Demand naturally moves to Asian growers, since Brazilian coffee is trading at a premium at the port of Vitória (+1 cent against ICE Europe converted into cents/lb), which takes away external competitiveness. In any case, conillon sales reach 68% of production, against 63% in the same period last year and 67% on the 5-year average.