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Coffee: SAFRAS raises 2018/19 production to 63.7 million bags

Brazil’s 2018/19 coffee crop surprised positively. Reports from growers, indicating a higher-than-expected result, and warehouses full of coffee were signals that production in 2018 would be larger than expected earlier. The USDA’s attaché revised the Brazilian production from 60.20 to 63.40 million bags. Last Tuesday (18th) was the turn of Conab, which raised the output to 61.70 million 60-kg bags.

The crop numbers reflect the advance in crop productivity. Conab’s report indicated that the area under production grew by only 0.1%, totaling 1.86 million hectares, while crop productivity jumped to 33 bags/ha, which corresponds to a 37% increase over the previous season. Coffee plantations were positively impacted by the favorable weather, renewed coffee trees, and investments in agricultural practices in previous years.
Thus, SAFRAS & Mercado also revised its crop number for 2018/19 in Brazil to 63.70 million bags, against 60.50 million in the previous forecast of May this year. In comparison with last season, production increased by 25%. In the case of arabica, the advance hit 24%, totaling 47.70 million bags. Positive year within the biennial cycle and with good graining, after an early blossoming with irregular rainfall, guaranteed the exceptional productive performance. Conillon, after years in a row with drought and below-potential production, finally had a good crop, projected now at 16 million bags, up 31% from 2017/18 (12.20 million bags).

The improvement in the Brazilian crop reinforces the idea of slack in the global supply and helps make up a bearish scenario, which has long dominated international coffee prices. However, the market increasingly turns its attention to the next Brazilian crop, which is under development. A promising blossoming and regular rainfall indicate a good crop in 2019. Of course, arabica production must feel the effect of the alternating biennial cycle, especially after a large crop as the one reaped this year. However, the new plantations, good agricultural practices, and the hitherto favorable weather help reduce the biennial effect.
There must also be another year of growth in conillon production in Brazil. In this sense, we project an initial 2019/20 crop with 55 to 58 million bags. The beginning of the year and the graining period, when regular rainfall is required, will be critical to sustaining these preliminary forecasts.

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Dylan Pasqua

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