
Dec 7
Coffee Weekly Report - 2023 12 07
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- Coffee prices are volatile nearing December contract expiration, influenced by changes in arabica ICE rules and low destination stocks.
- Concerns focus on Brazil's 24/25 crop, with recent warm weather impacting conilon production. Espírito Santo, main conilon state, has an ONI Index below 2015 levels, which preceded a 30% production drop.
- Despite a lower ONI Index, El Niño brings stronger anomalies in November 2023 with temperatures 9°C higher and precipitation 75mm below the November 2015 average.
- Contrasting 2015 and 2023 weather patterns show more negative vegetation conditions in 2015, not only in Espírito Santo but also in other coffee-producing regions.
- For the next few weeks, caution is needed regarding the weather: the maintenance of higher temperatures and below-average rainfall can harm yields and reduce the potential seen until October in Espírito Santo.
El Niño’s impact in conilon areas
Coffee prices have been more volatile as we approach the expiration of the December contract, in the middle of changes to the arabica ICE certification rules and historically low destination stocks.
Concerns are now turning towards the 24/25 crop in Brazil, as the recent warm weather has been attributed as the cause behind chumbinhos falling in coffee areas, especially for conilon.
Looking at Espírito Santo, the main conilon-producing state, there are some points to consider.
First, it’s important to note that the ONI Index has not reached the same levels as seen in 2015 during development (Figure #1) – prior to the 30% drop in production observed (from 15.3M bags in 15/16 to 10.7M bags in 16/17, considering that the 15/16 crop was already weakened by weather issues).
Usually, the phenomenon leads to warmer temperatures and lower rainfall levels in the region during the last two months of the year (Figure #2).
Image 1: ONI Index – ENSO Status (°C)

Source: NOAA
Image 2: November-December El Niño Anomalies

Source: hEDGEpoint
In addition to other global impacts of climate change, the El Niño phenomenon has brought more intense anomalies, despite the lower ONI Index. Comparing November 2023 to the historical average, maximum temperatures have been higher than normal by 9°C (Figure #3), and monthly precipitation has been 75mm below average (Figure #4) – and the observed levels are also more severe than those seen in 2015.
Image 3: Maximum Temperature Anomaly (°C)

Source: USDA
Image 4: Precipitation Anomaly (mm)

Source: USDA
Image 5: NDVI Anomaly – First week of December

Source: USDA
However, there are two points to be considered in contrast to the weather patterns.
i) Vegetation conditions
In 2015, since the El Niño phenomenon had already been active for a longer period, the crop was already weakened, and the NDVI levels were worse in the first week of December when compared to 2023. This is also true for other coffee-producing regions, such as Minas Gerais, São Paulo, and Paraná (Figure #5).
ii) Area increase
Given the conilon producer margins observed in 2021, there was an incentive for area expansion in the region. Margins were higher in that year when compared to the other periods since 2018 (Figure #6).
Consequently, the area expansion observed since 2021 (Figure #7) would reach average production potential in the next 2-3 years, placing 24/25 as a key point in time.
Consequently, the area expansion observed since 2021 (Figure #7) would reach average production potential in the next 2-3 years, placing 24/25 as a key point in time.
Image 6: Conilon Prices/Production Costs Ratio

Fonte: Cepea, Conab
Image 7: Conilon Total Area – Conab (‘000 ha)

Fonte: Conab
In Summary
Coffee prices are experiencing increased volatility due to the approaching expiration of the December contract, changes in arabica ICE certification rules, and historically low destination stocks. Concerns now focus on Brazil's 24/25 crop, with recent warm weather affecting coffee areas, particularly conilon.
Examining Espírito Santo, the primary conilon-producing state, the ONI Index hasn't reached 2015 levels, which preceded a 30% production drop. Despite a lower ONI Index, El Niño has caused stronger anomalies, with November 2023 temperatures 9°C higher and precipitation 75mm lower than average.
Contrasting climate patterns, vegetation conditions in 2015 were more negative, and the increase in area was also significant in recent years.
Still, for the next few weeks, caution is needed regarding the weather: the maintenance of higher temperatures and below-average rainfall can harm yields and reduce the potential seen until October in Espírito Santo.
Weekly Report — Coffee
Written by Natália Gandolphi
natalia.gandolphi@hedgepointglobal.com
natalia.gandolphi@hedgepointglobal.com
Reviewed by Lívea Coda
livea.coda@hedgepointglobal.com
www.hedgepointglobal.com
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