Apr 9 / Natália Gandolphi

Crop Forecast: Coffee Brazil

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24/25 Brazil Crop Update

In this report, we will go over the last updates on the 24/25 Brazilian crop. In the interest of focusing on the major regions, we will highlight the adjustments to South of Minas Gerais, Zona da Mata, and Espírito Santo.

Cumulative precipitation levels ended 2023 on a 10-year low, and the recovery in Q1/24 stopped the bleeding, but whatever damage that occurred in Q4/23 has already happened. Temperatures are also a concern: El Niño hits Espírito Santo the hardest, with record high temperatures, even triggering widespread cases of cochonilha in the region. 

The phenomenon also impacted arabica producing areas, albeit at a much lower degree. SMG recorded 10-year high temperatures in both Q4/23 and Q1/24, and precipitation has also suffered more recently. Still, favorable rainfall up to the last quarter in 2023 helped maintain soil moisture levels, avoiding a crop failure in the region. Zona da Mata, however, did not see the same rainfall support through 2023 as SMG, which did impact our crop revision.

Cumulative Precipitation – Espírito Santo (mm)

Source: Refinitiv

Average Temperature – Espírito Santo (°C)

Source: Refinitiv

Cumulative Precipitation – SMG (mm)

Source: Refinitiv

Average Temperature – SMG (°C)

Source: Refinitiv

Cumulative Precipitation – Zona da Mata (mm)

Source: Refinitiv

Average Temperature – Zona da Mata (°C)

Source: Refinitiv

Consequently, we are now working with lower estimates for both arabica and robusta. Arabica was adjusted to 45.60M bags, only slightly higher than the previous cycle, and with potential to see an inversion in off-years/on-years in 25/26 (both due to the trend itself and the good vegetative development seen for the next crop, with trees loaded with good foliage). As for robusta, since the crop was impacted by weather itself and diseases, the adjustment led the figure lower when compared to recent years.

Arabica Production – Brazil (M bags)

Source: hEDGEpoint

Conilon/Robusta Production – Brazil (M bags)

Source: hEDGEpoint

In Summary

This report provides updates on the 24/25 Brazilian crop, focusing on major regions like South of Minas Gerais, Zona da Mata, and Espírito Santo. Precipitation levels hit a 10-year low in 2023, but recovery in Q1/24 alleviated some concerns. However, damage from Q4/23 persists. El Niño caused record-high temperatures in Espírito Santo, affecting both crops and triggering cochonilha outbreaks. SMG faced high temperatures and decreased precipitation, though favorable rainfall in 2023 mitigated crop failure. Zona da Mata had insufficient rainfall, impacting crop estimates. As a result, lower estimates were made for arabica (45.60M bags) and robusta due to weather and disease impact.

Disclaimer

This document has been prepared by hEDGEpoint Global Markets LLC and its affiliates ("HPGM") exclusively for informational and instructional purposes, without the purpose of creating obligations or commitments with third parties, and is not intended to promote an offer, or solicitation of an offer, to sell or buy any securities or investment products. HPGM and its associates expressly disclaim any use of the information contained herein that may result in direct or indirect damage of any kind. If you have any questions that are not resolved in the first instance of contact with the client (client.services@hedgepointglobal.com), please contact our internal ombudsman channel (ouvidoria@hedgepointglobal.com) or 0800-878-8408 (for clients in Brazil only).

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