Dryness takes further toll on Brazil’s robusta crop

Dryness takes further toll on Brazil’s robusta crop

Ideas of Brazilian robusta production are being slashed, thanks to continued dry weather in the country’s main growing region for the variety.

Coffee trader Terra Forte trimmed its ideas of the Brazilian robusta crop by 2.4m bags, to 10.4m bags, citing dry conditions in Espirito Santo, Brazil’s top robusta growing state.

This would be a reduction of some 22% year on year.

And Terra Forte said the “situation remains as bad as it could be in Espirito Santo, reinforcing our view that the 2017-18 crop will be severely affected once again”

IBGC cuts prospects

This week the Brazilian statistics agency forecast coffee production in Espirto Santo at a 12-year low 5.28m bags, down 16% from its estimate last month.

Brazil’s total coffee output was seen at 48.8m bags, compared to 49.6m bags forecast last month.

In May, the US Department of Agriculture saw robusta production at 12.1m tonnes, down 9% year on year, noting “above-average temperatures and prolonged dry spells in Espirito Santo”.

Spread remains wide

Robusta coffee, which is cheaper than arabica, is blended into coffee in order to keep costs down.

Tight robusta supplies in Brazil will also impact arabica exports, as it will lead to supplies of the latter being diverted into the domestic market in order to make up for shortfalls of the former.

But as arabica prices rally, the spread between robusta and arabica has widened to above 60 cents a pound, the highest level since March last year.

This will incentivise roasters and blenders to keep up robusta purchases, despite the rise in prices.

September robusta futures in London were up 0.3%, at $1,822 a tonne, in afternoon deals.

This is below the highs of earlier this month, but it is otherwise the highest since June 2015.