Declining Coffee Stockpiles in Brazil Amidst Record Prices
Brazil’s coffee stockpiles are shrinking as farmers sell early due to record high prices. With projections indicating declining production, this situation has raised concerns about future supply gaps. Farmers, especially smallholders, are strategically holding onto some harvests amidst rising market prices.
Brazil is experiencing a significant decrease in coffee stockpiles, which were anticipated to last until July. This reduction is primarily due to farmers capitalizing on record high prices. Following a damaging drought in 2024, Brazilian coffee farmers have already sold a substantial portion of their beans, with the global prices nearly doubling within the past year and a half. Arabica coffee prices surged by 70 percent last year, while robusta prices increased by 72 percent.
Recent reports indicate that arabica reached over US$4.30 per pound on February 11, while robusta peaked at US$5,847 per metric ton on February 12. Consultancy Safras & Mercado reported that farmers have sold 88 percent of their 2024 coffee crop as of last Monday, surpassing both last year’s figures of 79 percent and the five-year average of 82 percent. As Willian Cesar Freiria, sales manager at the Cocapec cooperative, stated, the stock levels are alarmingly low for February, a period still far from the new harvest.
Luiz Fernando dos Reis, sales superintendent for Cooxupe, indicated that their farmers had sold 90 percent of the crop. He remarked, “What they have left is the lowest amount we ever saw in our records.” With the next harvest not expected until around May or June and shipping not available until July, this creates a gap in supply. Small-scale farmers are following suit, though some retain portions of their harvest for security.
For instance, Paulo Armelin, a farmer from the Cerrado Mineiro region, retains 40 percent of his coffee as a safeguard against lower production. He is currently negotiating a sale with a roaster for US$4.50 per pound, reflecting a near 48 percent increase over last year’s price. Despite this, coffee futures sales this year languish at 13 percent, falling short of the four-year average of 22 percent.
The Brazilian government crop forecasting agency, Conab, has predicted a 4.4 percent decline in coffee production for the 2025 to 2026 crop season, potentially marking a three-year low due to continued low rainfall resulting in the driest weather conditions seen in decades.
In summary, Brazil’s coffee stockpile is rapidly diminishing due to farmers seizing record high prices. With substantial portions of the 2024 crop already sold and predictions of declining production, the situation signals a worrying outlook for coffee supply in the near future. As farmers adjust to these circumstances, the balance of market prices remains precarious, driven by both environmental factors and market demand.
Original Source: macaonews.org
