Coffee Annual 2012

An Expert's View about Coffee and Tea in Brazil

Posted on: 28 Nov 2012

The ATO/Sao Paulo estimate for Brazilian coffee production during marketing year (MY) 2012/13 (July-June) remains unchanged at 55.9 million 60-kg bags.

THIS REPORT CONTAINS ASSESSMENTS OF COMMODITY AND TRADE ISSUES MADE BY USDA STAFF AND NOT NECESSARILY STATEMENTS OF OFFICIAL U.S. GOVERNMENT POLICY Required Report - public distribution Date: 11/14/2012 GAIN Report Number: BR12015 Brazil Coffee Annual 2012 Approved By: Frederick Giles, Director Agricultural Trade Office, Sao Paulo Prepared By: Sergio Barros, Agricultural Specialist Report Highlights: This report updates BR1206. The ATO/Sao Paulo estimate for Brazilian coffee production during marketing year (MY) 2012/13 (July-June) remains unchanged at 55.9 million 60-kg bags, up 6.7 million bags compared to the previous year, due to the on-year of the biennial production cycle of the Arabica trees. Coffee exports are estimated at 32.95 million bags, up 3.1 million bags compared to MY 2011/12, due to higher availability of the product. Carry-over stocks are forecast at 4.54 million bags. Coffee, Green Production: The Agricultural Trade Office Sao Paulo (ATO) estimate for the Brazilian coffee production for marketing year (MY) 2012/13 (July-June) remains unchanged at 55.9 million 60-kg bags, green equivalent. Arabica production accounts for 40.2 million bags, whereas Robusta production is estimated at 15.7 million bags. The harvest was over in October. Excessive rainfall during the beginning of the harvest (June/July) affected somewhat the quality of beans in Arabica growing regions, but post contacts report that this is not a major issue for marketing the crop. According to industry sources, approximately 50 percent of the 2012/13 crop has already been marketed. Area harvested and tree inventory estimates remain unchanged. In September 2012, the Brazilian government (GOB), through the National Supply Company (CONAB) of the Ministry of Agriculture, Livestock and Supply (MAPA), released the third official coffee production estimate for MY 2012/13. As reported by CONAB, coffee production is estimated at 50.48 million bags, similar to the May 2012 crop survey (50.45 million bags), but up 7 million bags from MY 2011/12 (43.48 million bags). The Brazilian Institute of Geography and Statistics (IBGE) has released its September 2012 coffee production forecast for MY 2012/13. IBGE projects production of 3.053 million metric tons of coffee, or 50.9 million 60-kg coffee bags, a 15 percent increase compared to MY 2011/12 (44.3 million bags). No official forecast has yet been announced for MY 2013/14. Industry sources report a first steady blossoming during late September and October in major coffee areas. Arabica trees will be in the off-year of the biennial production cycle, therefore contributing to an expected decrease in the coffee supply for the upcoming crop. Production Costs The table below shows updated production costs in Guaxupe – Minas Gerais, one of the main coffee growing regions. Total costs in 2012 are estimated at US$ 167.37/bag, down US$ 4.85/bag relative to 2011 (US$ 172.22/bag), mainly due to the devaluation of the local currency, the real. Estimated Cost of Production - Arabica Coffee - Guaxupe - MG Growing Region, US$/60 kg-bag; 30 bags/ha.) ITEM 2010/11 2011/12 2012/13 PLANTING COSTS 1 - Airplane operations 0.00 0.00 0.00 2 - Mechanized operations 9.36 9.09 9.37 3 - Land analysis, sacks and others 5.62 5.11 4.75 4 - Temporary labor (including benefits) 92.17 89.59 92.48 5 - Fixed labor (including benefits) 1.10 1.08 1.13 7 – Seedling 0.00 0.00 0.00 8 - Fertilizer 24.31 27.37 24.55 9 – Pesticide 14.77 13.47 13.21 TOTAL PLANTING COSTS (A) 147.33 145.71 145.50 II - COSTS AFTER HARVEST 1 - Transport (off-farm) 0.00 0.00 0.00 2 - Receiving, cleaning, drying, storage 0.00 0.00 0.00 3 – PROAGRO 0.00 0.00 0.00 4 - Technical assistance 0.00 0.00 0.00 5 – Processing 2.62 2.43 2.23 TOTAL COSTS AFTER HARVEST (B) 2.62 2.43 2.23 III - FINANCIAL COSTS 1 – Interest 5.50 4.93 4.18 TOTAL FINANCIAL COSTS (C) 5.50 4.93 4.18 VARIABLE COSTS (A+B+C = D) 155.45 153.08 151.91 IV – DEPRECIATION 1 - Depreciation farm and improvements 0.41 0.26 0.24 2 - Implement depreciation 0.00 0.00 0.00 3 - Machinery depreciation 0.00 0.00 0.00 4 - Coffee plantation depreciation 12.85 11.92 8.88 TOTAL DEPRECIATION (E) 13.26 12.18 9.12 V - OTHER FIXED COSTS (F) 1 - Regular machinery maintenance 0.02 0.02 0.00 2 - Insurance for fixed capital 0.05 0.03 0.03 3 – Benefits 0.36 0.36 0.37 TOTAL OTHER FIXED COSTS 0.43 0.41 0.41 FIXED COSTS (E+F = G) 13.69 12.59 9.52 OPERATIONAL COSTS (D+G = H) 169.14 165.66 161.43 VI - FACTOR INCOME 1 - Estimated income over fixed capital 0.38 0.25 0.23 2- Estimated income over coffee plantation 0.38 0.36 0.27 3 – Land 6.41 5.95 5.45 TOTAL FACTOR INCOME (I) 7.18 6.55 5.94 TOTAL COSTS (H+I = J) 176.32 172.22 167.37 Source: CONAB/DIGEM/SUINF/GECUP ROE: Nov/10 = 1.72; Nov/11 = 1.85; May/12 = 2.02 Coffee Prices in the Domestic Market The table below shows the Coffee Index price series released by the University of Sao Paulo’s Luiz de Queiroz College of Agriculture (ESALQ). The series tracks coffee prices in the domestic spot market starting in September 1996. Coffee prices dropped in 2012 both in the local currency, the real, as well as in U.S. dollars (US$ 189.87/bag during the July-October 2012 compared to US$ 289.25/bag during the same period in 2011), as a consequence of higher production and the devaluation of the real vis-à-vis the U.S. dollar. Post contacts reported that coffee farmers have been reluctant to sell the product at prices below R$ 400.00/box. Many producers got credit to finance storage costs, therefore selling only the necessary volumes to balance their cash-flows. Arabica Coffee Prices in the Domestic Market (Real, 60kg/bag). Month 2008 2009 2010 2011 2012 January 267.84 268.41 280.75 433.34 485.04 February 285.19 269.34 278.68 495.98 441.31 March 263.28 262.48 279.70 524.27 387.53 April 256.35 260.10 282.18 524.41 379.53 May 254.84 268.02 289.46 530.76 382.65 June 255.76 256.64 305.98 514.99 360.61 July 250.51 247.50 302.36 457.81 408.06 August 248.86 255.34 313.93 470.62 378.48 September 261.58 254.29 328.23 511.57 385.92 October 256.84 262.20 327.15 490.45 374.97 November 1/ 261.28 272.55 355.51 493.83 361.62 December 262.04 281.57 387.01 491.35 --- Source: CEPEA/ESALQ/USP. November 2012 refers to November 5. Consumption: During MY 2012/13, the Brazilian domestic consumption is projected at 20.69 million coffee bags (19.58 million bags of roast/ground and 1.11 million bags of soluble coffee, respectively), a 3.5 percent increase compared to updated figure for MY 2011/12 (19.98 million bags), reflecting updated information from the Brazilian Coffee Industry Association (ABIC). According to ABIC, the increase in consumption reflects the growth of the habit of drinking coffee in coffee shops and the broader and more differentiated array of coffee products in the Brazilian market. ABIC reports that the coffee industry processed 19.98 million bags, green equivalent, from May 2011 to April 2012, up 3 percent compared to the same period the year before. Per capita consumption for the aforementioned period is estimated at 4.94 kg of roasted coffee per person. ABIC projects total domestic consumption for 2012 and 2012 at 20.41 and 21 million bags, respectively. The average retail coffee price in July 2012 was R$ 13.55 per kilogram, a 2 percent increase relative to December 2011 (R$ 13.26 per kilogram). Total market sales are estimated at R$ 7.7 billion in 2012. The table below shows domestic ground and soluble coffee consumption as reported by ABIC. Domestic Ground and Soluble Coffee Consumption (Million 60 kg bags,kg/year). Year Consumption (Million 60 kg bags) Consumption per capita (kg) Roast/Ground Soluble Total Roast Green Beans 2001 13.00 0.60 13.60 3.91 4.88 2002 13.30 0.74 14.04 3.86 4.83 2003 12.90 0.80 13.70 3.72 4.65 2004 14.10 0.80 14.90 4.01 5.01 2005 14.60 0.90 15.50 4.11 5.14 2006 15.40 0.93 16.33 4.27 5.34 2007 16.10 1.00 17.10 4.42 5.53 2008 16.68 0.98 17.66 4.51 5.64 2009 17.37 1.02 18.39 4.65 5.81 2010 18.06 1.07 19.13 4.81 6.02 2011 18.60 1.12 19.72 4.88 6.10 Source: Brazilian Coffee Industry Association (ABIC). Note: Estimates refer to November-October period. Trade: Exports In MY 2012/13, ATO/Sao Paulo estimates Brazilian coffee exports at 32.95 million bags, a 3.1 million bag increase relative to the previous season, due to higher availability of the product. Green bean exports are likely to account for 29.6 million bags, while soluble coffee exports are projected at 3.3 million bags. For MY 2011/12 coffee exports were revised to 29.84 million 60-kg bags, green beans, down 5.2 million bags compared to MY 2010/11, based on updated information from the industry. Green bean (arabica and robusta) exports are estimated at 26.56 million bags, whereas soluble coffee exports are estimated at 3.2 million bags. According to the September 2012 Coffee Market Report released by the International Coffee Organization (ICO), total world coffee consumption for 2011 is estimated at 139 million bags, up 1.846 million bags or a 1.3 percent growth relative to 2010 (137.154 million bags). The table below shows green coffee bean (NCM 0901.11.10), soluble coffee (NCM 2101.11.10) and roasted coffee exports (NCM 0901.21.00) by country of destination, according to SECEX, for MY 2011/12 and 2012/13 (July-September). Brazilian Green Coffee Exports by Country of Destination (NCM 0901.11.10, MT,US$ 000 FOB) MY 2011/12 1/ MY 2011/12 2/ MY 2012/13 2/ Country Quantity Value Quantity Value Quantity Value USA 336,658 1,518,609 94,594 437,792 82,383 277,237 Germany 318,899 1,473,333 89,037 435,388 60,235 215,658 Italy 149,569 708,801 39,401 200,408 35,813 125,929 Japan 127,003 635,693 33,827 170,978 27,434 105,964 Belgium 111,787 540,216 27,560 137,113 19,419 70,951 Spain 41,287 191,799 13,808 66,279 7,409 26,260 Sweden 36,245 164,968 8,633 41,899 7,531 26,009 France 32,818 138,751 10,493 45,243 8,372 29,366 United Kingdom 27,789 156,853 5,475 28,240 4,267 16,561 Argentina 27,523 95,241 8,068 28,091 8,438 25,176 Others 383,062 1,567,850 93,270 395,191 102,986 333,651 Total 1,592,641 7,192,115 424,165 1,986,622 364,287 1,252,763 Source : Brazilian Foreign Trade Secretariat (SECEX) Note: Numbers may note add rounding 1/July-June, 2/July-September Brazilian Soluble Coffee Exports by Country of Destination (NCM 2101.11.10, MT,US$ 000 FOB) MY 2011/12 1/ MY 2011/12 2/ MY 2012/13 2/ Country Quantity Value Quantity Value Quantity Value USA 12,834 98,737 3,709 28,159 2,766 20,359 Russia 8,130 78,165 1,938 19,954 2,649 24,429 Ukraine 5,820 54,812 1,970 17,843 1,867 15,838 Argentina 5,477 35,924 1,817 11,378 1,514 10,210 Japan 5,168 46,724 1,282 10,625 1,395 11,556 Germany 3,382 29,367 705 6,018 1,192 9,195 Indonesia 3,104 24,825 1,050 7,955 929 6,681 South Korea 2,687 35,860 251 2,873 727 9,010 United Kingdom 2,448 21,106 409 3,700 1,072 8,937 Hungary 2,135 16,030 321 2,288 391 2,792 Others 26,634 258,537 7,739 75,037 7,864 72,231 Total 77,821 700,088 21,192 185,830 22,366 191,239 Source : Brazilian Foreign Trade Secretariat (SECEX) Note: Numbers may note add rounding 1/July-June, 2/July-September Brazilian Roasted Coffee Exports by Country of Destination (NCM 0901.21.00, MT,US$ 000 FOB) MY 2011/12 1/ MY 2011/12 2/ MY 2012/13 2/ Country Quantity Value Quantity Value Quantity Value USA 1,327 12,829 444 4,239 420 4,132 Italy 644 3,426 170 941 2 37 Japan 198 1,295 44 271 18 137 Argentina 135 1,187 28 274 46 313 Bolivia 133 637 59 281 11 54 Chile 122 1,057 33 274 39 301 Paraguay 122 711 28 159 47 271 Uruguay 65 354 19 97 10 56 France 45 413 8 88 0 0 Georgia 22 115 9 42 8 43 Others 139 1,216 35 312 47 364 Total 2,952 23,240 877 6,978 647 5,710 Source : Brazilian Foreign Trade Secretariat (SECEX) Note: Numbers may note add rounding 1/July-June, 2/July-September The tables below include data on monthly coffee exports (quantity and value) for MY 2011/12 and MY 2012/13 (July-September), as reported by Brazilian Green Coffee Association (CECAFE) and the Brazilian Soluble Coffee Association (ABICS). Total coffee exports during MY 2011/12 period were 29.79 million bags, down 5.21 million bags relative to MY 2010/11 (35 million bags). According to CECAFE, coffee exports during July-September 2012 are 6.94 million bags, down 12.4 percent compared to the same period in 2011. CECAFE reports that lower exports are related to the delay in the harvest and processing of the beans in the beginning of the crop due to rainfall, and the strike of the custom agents at the ports promoting an overload of imported goods in the warehouses, therefore slowing down shipment of exporting goods. Coffee analysts also report that coffee growers are relatively well capitalized due to strong coffee prices in 2011 and financing from the Brazilian government, therefore selling their product only when they get specific profit margins. Post contacts also relate that coffee importers have been reluctant to form larger stocks due to the economic turmoil in the northen hemisphere countries, major coffee consumers worldwide. Preliminary data show that coffee export registrations for October 2012 were 2.79 million bags while cumulative green coffee export shipments for October 2011 are 2.4 million bags. Brazilian Monthly Coffee Exports for MY 2011/12 (Thousand 60-kg bag, green equivalent). Month Conillon Arabica Roasted Total Green Soluble Total Jul-11 265.74 1,531.88 4.75 1,802.37 260.36 2,067.49 Aug-11 322.28 2,318.38 5.04 2,645.70 275.33 2,926.07 Sep-11 224.81 2,398.75 4.89 2,628.45 307.64 2,940.98 Oct-11 236.16 2,692.80 6.09 2,935.05 240.74 3,181.87 Nov-11 147.58 2,603.80 4.03 2,755.41 286.70 3,046.14 Dec-11 76.01 2,534.44 6.22 2,616.67 392.81 3,015.70 Jan-12 37.42 1,898.55 3.23 1,939.20 200.45 2,142.88 Feb-12 53.06 1,930.08 4.16 1,987.30 236.45 2,227.90 Mar-12 79.14 1,924.44 4.69 2,008.26 252.24 2,265.18 Apr-12 19.93 1,734.23 3.14 1,757.30 246.97 2,007.40 May-12 89.09 1,725.72 3.05 1,817.85 294.26 2,115.15 Jun-12 185.49 1,475.47 1.76 1,662.72 241.98 1,906.46 Cumulative 1,736.69 24,768.53 51.04 26,556.26 3,235.92 29,843.21 Source: CECAFE and ABICS. Brazilian Monthly Coffee Exports for MY 2012/13 (Thousand 60-kg bag, green equivalent). Month Conillon Arabica Roasted Total Green Soluble Total Jul-12 174.33 1,678.69 4.10 1,857.12 265.17 2,122.29 Aug-12 230.60 2,032.85 3.78 2,267.23 328.64 2,595.87 Sep-12 80.04 1,862.25 3.12 1,945.41 277.39 2,222.80 Cumulative 484.97 5,573.80 10.99 6,069.75 871.20 6,940.95 Brazilian Monthly Coffee Exports for MY 2011/12 (US$ 1,000,000). Month Conillon Arabica Roasted Total Green Soluble Total Jul-11 38.43 444.79 1.89 485.11 53.82 538.93 Aug-11 45.43 687.81 2.29 735.53 57.03 792.56 Sep-11 32.05 730.59 1.98 764.61 63.53 828.15 Oct-11 32.50 810.57 2.52 845.58 51.49 897.07 Nov-11 19.66 765.80 1.47 786.93 60.38 847.31 Dec-11 9.67 730.70 2.67 743.04 82.83 825.87 Jan-12 4.71 536.35 1.11 542.17 40.67 582.83 Feb-12 7.33 522.34 1.51 531.18 47.47 578.65 Mar-12 12.27 498.29 2.01 512.57 52.71 565.28 Apr-12 2.74 431.51 1.47 435.72 52.46 488.18 May-12 13.26 412.48 1.37 427.10 62.20 489.30 Jun-12 25.54 334.59 0.84 360.98 52.48 413.46 Cumulative 243.58 6,905.81 21.12 7,170.51 677.08 7,847.59 Source: CECAFE and ABICS. Brazilian Monthly Coffee Exports for MY 2012/13 (US$ 1,000,000). Month Conillon Arabica Roasted Total Green Soluble Total Jul-12 24.03 358.46 1.99 384.48 54.01 438.49 Aug-12 31.83 429.34 1.93 463.09 65.37 528.46 Sep-12 11.33 393.80 1.47 406.59 54.42 461.01 Cumulative 67.19 1,181.59 5.38 1,254.16 173.79 1,427.96 Stocks: ATO/Sao Paulo estimates ending stocks in MY 2012/13 at 4.54 million bags, up 2.26 million bags compared to MY 2011/12 (2.28 million bags). Coffee stocks held by MAPA/DECAF (Funcafe stocks) are estimated at approximately 14,000 bags, whereas CONAB coffee stocks on September are reported at 1.62 million bags. The results from CONAB’s 2012 private stocks survey, including stocks held by growers, coffee cooperatives, exporters, roasters and the soluble industry on March 31st were 8.41 million bags, down 823,520 bags from the previous year. The table below shows the results of the last three private stock surveys released by CONAB. Brazilian Private Coffee Carry-Over Stocks (60-kg Bags) Mar 31, 2010 Mar 31, 2011 Mar 31, 2012 2009 crop 2010 crop 2011 crop Arabica Conillon Arabica Conillon Arabica Conillon Industry 739,812 172,121 667,851 319,927 550,676 229,879 Roasters 721,712 138,250 560,752 140,645 533,493 176,175 Soluble 18,100 33,871 107,099 179,282 17,183 53,704 Exporters 1,931,899 194,619 2,162,713 387,393 1,569,713 140,137 Coops 3,042,082 154,843 2,438,153 17,630 3,311,606 170,414 Others 2,531,543 177,069 2,964,091 280,377 2,289,485 152,705 Total 8,245,336 698,652 8,232,808 1,005,327 7,721,480 693,135 Grand Total 8,943,988 9,238,135 8,414,615 Source: CONAB, Annual Carry Over Stock Surveys - Reference Month = March 31st. Production, Supply and Demand Data Statistics: Coffee, Green Brazil 2010/2011 2011/2012 2012/2013 Market Year Begin: Jul 2010 Market Year Begin: Jul 2011 Market Year Begin: Jul 2012 USDA Official New Post USDA Official New Post USDA Official New Post Area Planted 2,409 2,409 2,410 2,410 2,398 2,398 Area Harvested 2,175 2,175 2,150 2,150 2,130 2,130 Bearing Trees 5,820 5,820 5,760 5,760 5,865 5,865 Non-Bearing Trees 815 815 835 835 950 950 Total Tree Population 6,635 6,635 6,595 6,595 6,815 6,815 Beginning Stocks 2,836 2,836 2,946 2,906 1,786 2,283 Arabica Production 41,800 41,800 34,700 34,700 40,200 40,200 Robusta Production 12,700 12,700 14,500 14,500 15,700 15,700 Other Production 0 0 0 0 0 0 Total Production 54,500 54,500 49,200 49,200 55,900 55,900 Bean Imports 0 0 0 0 0 0 Roast & Ground Imports 0 0 0 0 0 0 Soluble Imports 0 0 0 0 0 0 Total Imports 0 0 0 0 0 0 Total Supply 57,336 57,336 52,146 52,106 57,686 58,183 Bean Exports 31,810 31,810 27,250 26,556 30,630 29,600 Rst-Grnd Exp. 60 60 50 51 70 50 Soluble Exports 3,140 3,140 3,000 3,236 3,300 3,300 Total Exports 35,010 35,010 30,300 29,843 34,000 32,950 Rst,Ground Dom. Consum 18,300 18,330 18,920 18,900 19,580 19,580 Soluble Dom. Cons. 1,080 1,090 1,140 1,080 1,180 1,110 Domestic Use 19,380 19,420 20,060 19,980 20,760 20,690 Ending Stocks 2,946 2,906 1,786 2,283 2,926 4,543 Total Distribution 57,336 57,336 52,146 52,106 57,686 58,183 1000 HA, MILLION TREES, 1000 60 KG BAGS Exchange Rate Exchange Rate (R$/US$1.00 - official rate, last day of period) Month 2006 2007 2008 2009 2010 2011 2012 January 2.22 2.12 1.76 2.32 1.87 1.67 1.74 February 2.14 2.12 1.68 2.38 1.81 1.66 1.71 March 2.17 2.05 1.75 2.25 1.78 1.62 1.82 April 2.09 2.03 1.69 2.18 1.77 1.57 1.89 May 2.30 1.93 1.63 1.97 1.81 1.57 2.02 June 2.16 1.93 1.64 1.95 1.80 1.56 2.02 July 2.18 1.88 1.57 1.87 1.75 1.56 2.05 August 2.14 1.96 1.63 1.88 1.75 1.59 2.04 September 2.17 1.84 1.92 1.78 1.69 1.85 2.03 October 2.14 1.74 2.12 1.74 1.70 1.69 2.03 November 1/ 2.17 1.78 2.33 1.75 1.71 1.85 2.04 December 2.14 1.77 2.34 1.74 1.66 1.88 -- Source : Gazeta Mercantil and BACEN (as of October 2006) 1/ November 2012 refers to Nov 5
Posted: 28 November 2012

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