
Aug 16
/
Laleska Moda
Weather and Brazilian exports drive weekly market
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- Arabica and robusta coffee futures prices have fluctuated in recent days, reflecting the passage of a cold front in Brazil that brought frost to regions such as southern Minas Gerais, the Cerrado, and Mogiana.
- However, the impact is expected to be much ligther than in 2021, as the frosts were concentrated (especially in the lowlands). The vegetative condition of the crops until July - as measured by the NDVI index - is also more positive than in 2021, which could minimize the damage caused by the cold.
- Another factor influencing prices throughout the week was Brazilian export data for July. Total shipments reached 3.77 M bags in the month, up 25.7% on July/23 2023. The cumulative volume for 2024 now stands at 28.1 M bags, a new record for the period.
- While Arabica exports reached 2.49 M bags up 13% on Jul/23, conilon shipments reached 900.81 K bags, up 82.2% on last year and the second highest monthly volume on record.
- Conilon shipments continue to benefit from limited supply in Southeast Asia, with countries such as Vietnam and Indonesia importing Brazilian grains, reinforcing the prospect of lower robusta supplies this year.
Weather and Brazilian exports drive weekly market
This week saw high volatility in coffee futures prices, reflecting both weather concerns in Brazil and the country's latest export data. The advance of a cold front into Brazil over the last weekend (10-11 August) brought frost to some regions like Sul de Minas, Cerrado, and Mogiana, which boosted NY and LN contracts on Monday 12 August. Although contracts retreated the following day in light of Brazilian export data - discussed below - frosts were reported throughout the week, supporting coffee prices.
However, while we don't have precise measures of the impact, reports suggest that mainly lowland areas were affected, with possibly lower damage to crops. Compared to 2021, the frosts were much more concentrated and of lower intensity and may not translate into a loss of potential production for 25/26. In addition, the Normalized Difference Vegetation Index (NDVI), which is used to quantify the health and density of vegetation, is more positive in 2024 than in the same period in 2021, when the coffee plantations were affected by frost, and could help mitigate any damage caused by frost.
NDVI Anomaly - 2nd week of August 2021

Source: USDA - GADAS
NDVI Anomaly - 2nd week of August 2024

Source: USDA - GADAS
In the states of São Paulo and Minas Gerais, for example, the monthly average of the NDVI index is higher than in 2021, although in São Paulo it is below the 5-year average. Monitoring the index over the next few weeks, as well as the first blooms of the 25/26 harvest, will give a better idea of possible crop damage and the potential production for the next cycle. It's worth remembering that the cold front also brought rains to most of the coffee-growing areas, which could trigger flowering - there are already reports of flowers opening in ES.
Monthly NDVI Index – São Paulo

Source: USDA - GADAS
Monthly NDVI Index – Minas Gerais

Source: USDA - GADAS
Apart from concerns about the weather, Brazilian exports in July have also caught attention during the last week. According to Cecafé data released last Tuesday, total coffee exports reached 3.77 M bags in July, an increase of 25.7% compared to the same period in 2023. The cumulative volume for 2024 already totals 28.1 M bags, a new record for the period.
Arabica shipments reached 2.49 M bags in July, up 13% on July/23, while cumulative 2024 exports reached 20.65 M bags, an increase of 31.1% on the same period of 2023. The highlight, however, was conilon/robusta exports, which reached 900,800 bags in July, up 82.2% year-on-year and the second highest monthly volume on record after Nov/23. In 2024, exports of this variety have already reached 5.17 M bags, more than four times higher (+313.7%) than the volume exported by July 2023, marking the highest cumulative total by July in Cecafé's entire historical record.
The data also supports our expectations of higher exports in 24/25, even with lower production expected (see our full figures in the previous report), due to both attractive differentials and growing demand for Brazilian coffees, especially conilon/robusta.
Cumulative Exports - Brazil – Arabica (M bags)

Source: Cecafé
Cumulative Exports - Brazil – Conilon/Robusta (‘000 bags)

Source: Cecafé
When we analyze exports by destination for each variety, the demand for Brazilian conilon also becomes clear. Although shipments of arabica coffee also increased in 2024, particularly to Asia and the EU, there was a significant increase in conilon exports.
In the European Union, for example, the average cumulative exports by July over the last 5 years have been around 500,000 bags, while in 2024 the volume is already close to 2.5 M bags. This scenario mainly reflects supply restrictions in Southeast Asia from 2023 onwards, but the EU is expected to continue importing more Brazilian coffee this year, as supply is still likely to be tight in Vietnam and European stocks are lower than historical averages (see our report on the European market for more information).
However, this trend of increased robusta imports from Brazil was also observed in other markets, particularly in Asia. As in the EU, there has been an increase in Brazilian exports of conilon including Vietnam and Indonesia, producers of robusta, reinforcing the scenario of a limited supply of the variety in the medium term and supporting the price of coffee. Imports of Brazilian beans by other producing countries have reinforced that global demand remains resilient globally .
Exports by Destination – Brazil – Arabica (M bags)

Source: Cecafé
Exports by Destination – Brazil – Conilon/Robusta (‘000 bags)

Source: Cecafé
In Summary
Weather uncertainties have brought volatility to the arabica and robusta coffee markets in recent days. The passage of a cold front through Brazil over the weekend led to frost in some coffee growing regions, pushing up commodity prices. However, initial reports indicate that the impact was much lower than in 2021, as the frosts occurred mainly in lowland areas and the condition of the crop - as measured by the NDVI index - is better than this year.
On the other hand, better estimates of 25/26 production potential could be made in the coming weeks as the next season's flowering is expected to begin.
On the bearish side, Brazilian export data for July showed increased shipments, particularly of conilon/robusta coffee, which reached historic highs. The continued strong performance of Brazilian exports could put some downward pressure on the market in the short term, just as Indonesian exports did in July.
However, it's important to remember that the fundamentals still point to price support in the medium term. Even with a possible decline in some destinations, demand remains generally resilient, and the outlook continues to be for a global deficit in 24/25 with stocks (both origins and destinations) at lower levels.
Weekly Report — Coffee
Written by Laleska Moda
laleska.moda@hedgepointglobal.com
Reviewed by Livea Coda
livea.coda@hedgepointglobal.com
livea.coda@hedgepointglobal.com
www.hedgepointglobal.com
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