Outlook is for too tight supply in Brazil’s 2021/22 coffee season

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The projection for Brazil’s 2021 crop suffered a slight negative correction due to the irregular weather in the first months of the year. Thus, SAFRAS now estimates production at 56.5 million bags, down 19% from the previous season when the country reaped record-breaking 69.60 million bags. It is worth noting that the effect of the drought in April and much of May will be better assessed with both the harvest and processing progress.

On the demand side, an adjustment was made in domestic consumption, based on revised information from the Brazilian Coffee Industry Association (ABIC). And also a strong upward correction in export projections for the 20/21 season, in line with the partial performance of shipments. Thus, we have raised the projection for coffee shipments to nearly 47 million bags in 20/21, so increasing the record.

In general terms, the scenario for 21/22 is one of a sharply tight supply. Not even the recovery in stocks at the end of the season in 20/21 was able to attenuate the effect of Brazil’s 2021 crop losses. In this sense, we project an 18% decline in exportable potential, which would fall to 38 million bags (green + soluble + roasted-ground). However, the tumble in the flow of shipments will not be enough to contain the 57% decline in stocks, projected at 2.48 million bags at the end of the 21/22 season.