May 17 / Laleska Moda

Coffee Weekly Report - 2024 05 17

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  • Japan Coffee Association stock figures point to a recovery to 2.46M bags in March, up 1.1% on February and 1.3% year-on-year., with Brazil figuring as its main supplier.

  • Recovery in the Japanese stocks are mainly supported by 23/24 import. While still on lower levels than historical levels, cumulate volume until February reached 2.5M bags, higher than previously estimated.

  • This more positive outlook is also reflecting on apparent demand of the Asian country: cumulative demand for the first five months of the 23/24 season reached 2.58M bags, up 3.5% on the previous estimate and up 1.8% on the same period of the 22/23 season.

  • As for Brazil, the country continues to play an important role as a supplier. Cecafe latest report indicates that green coffee shipments reached 3.90M bags in April, up 61% on the same period last year.

  • Arabica export was up 40.1% year-on-year, to 3.22M bags . Conilon, reached 676,7K bags, five times higher than the same period in 2023, as Brazilian beans fill the gap left by Vietnam and Indonesia.

Japanese stocks and demand rebound as Brazil boosts exports

This week the Japan Coffee Association published its stock figures for the first three months of 2024. The data shows that after reaching historical lows in 2023, the trend for 2024 is one of recovery (Figure 1). On the other hand, it is good to note that this recovery has been slow: in March, stocks reached 2.46M bags, up 1.1% on February and 1.3% year-on-year. Over this period, Brazil and, to a lesser extent, Vietnam have been the main suppliers, while the participation of Central American beans has declined (Figure 2).

An increase in imports in the 23/24 season is the main support for this slight recovery in Japanese coffee stocks, but the figures are still lower than in previous years and could improve in the coming months. In the 22/23 season, green coffee imports from October to February reached 2.16M bags, while for the same period of 23/24, volume was of 2.5M bags, an increase of 15.9%, and above our previous estimates.

Figure 1: Stocks – Japan Coffee Association (M bags)

Source: JCA

Figure 2: Stocks by origin – Japan Coffee Association (‘000 bags) 

Source: JCA

Based on the more optimistic scenario of the two later indicators, we also expect a recovery in apparent demand compared to previous estimates. Cumulative demand for the first five months of the 23/24 season reached 2.58M bags, up 3.5% on the previous estimate and up 1.8% on the same period of the 22/23 season (Figure 3). While there may be changes in the trend, based on this scenario we could still see a positive correction in Japan's apparent demand for 23/24, which is currently expected to reach 6.18M bags this season. Finally, in terms of the type of coffee demanded, the trend for 23/24 remains towards a decline in the arabica mix. On another note, as previously stated in this analysis, we are still seeing a change in the origin of this coffee, with an increase in Brazilian beans.

Brazil's cumulative exports to Japan in the last 6 months have increased by 6.4% compared to the previous period, according to Cecafe. But while arabica exports to the Asian country increased by 5% during this period, conilon increased by 102.2%.

Figure 3: Aparent Consumption – Japan (M bags)

Source: JCA, HEdgepoint

The surge in Brazilian coffee is in line with the latest export figures published by Cecafe: green coffee shipments reached 3.90M bags in April, up 61% on the same period last year. The data confirms the trend of previous months, indicating that 2024 may end with higher Brazilian exports.

Arabica shipments totaled 3.22M bags, up 2.4% on March and 40.1% on last year. For Conilon, despite a 20.9% drop from March (the highest volume of the quarter), exports are still five times higher than the same period in 2023, to 676,7K bags, as Brazilian beans fill the gap left by Vietnam and Indonesia.

As the 24/25 harvest in Brazil gathers pace, exports tend to increase in the coming months, raising expectations. Finally, regarding 24/25 production, recent reports have highlighted concerns about bean processing yields. While it is too early to make concrete estimates, lower than expected rainfall in 2024 could have an impact on bean filling. In this sense, the market will closely monitor the development of yields as the harvest is about to peak in the following weeks.

Figure 4: Arabica green exports – Brazil (M bags)

Source: Cecafe

Figure 4: Conilon green exports – Brazil (000’ bags)

Source: Cecafe

In Summary

Data from the Japan Coffee Association points to a recovery in stocks, mainly supported by higher-than-expected imports in 23/24. Although these indicators are still lower than in previous years, the performance has been better than expected and could support a recovery in apparent demand in 23/24.

Brazil also plays a role in Japan's coffee import figures, as the former has increased its involvement as a supplier to the latter. Brazilian beans are currently in high demand in the market and will remain so, especially for the Conilon variety, given the decline in exports from Vietnam and Indonesia.

Weekly Report — Coffee

Written by Laleska Moda 

Reviewed by Natália Gandolphi


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