Arabica Pushes Higher on Dry Conditions in Brazil

July arabica coffee (KCN22) this morning is up +1.25 (+0.54%), and July ICE Robusta coffee (RMN22) is down -1 (-0.05%).

Coffee prices this morning are mixed, with arabica climbing to a 1-1/2 month high.  Arabica moved higher today on dry conditions in Brazil that may lead to smaller coffee production after Somar Meteorologia Monday reported that Minas Gerais received no rain in the past week.  Minas Gerais accounts for about 30% of Brazil's arabica crop. 

Robusta coffee is slightly lower today after Vietnam's General Statistics Office reported that Vietnam's Jan-May coffee exports jumped +24.2% y/y to 889,000 MT.  Vietnam is the world's biggest producer of robusta coffee beans.

The Colombian Coffee Growers' Federation reported May 5 that Colombian Apr coffee exports dropped -18% y/y to 845,000 bags, which was supportive for arabica coffee since Colombia is the world's second-largest arabica producer.

Signs of smaller global coffee supplies are bullish for prices after the International Coffee Organization (ICO) reported May 2 that global 2022 coffee exports during Oct-Mar fell -0.1% y/y to 66.25 mln bags.  

Conab on May 19 raised its estimate for Brazil's 2022 coffee crop by +12% to 53.4 mln bags from a previous estimate of 47.7 mln bags.  

An increase in U.S. coffee supplies is bearish for prices after the Green Coffee Association reported last Monday that U.S. Apr green coffee inventories rose +1.5% m/m and +2.5% y/y to 5.907 million bags.

The International Coffee Organization (ICO) recently cut its global 2020/21 supply estimate to a deficit of -3.13 mln bags from a previous estimate of a +1.2 mln bag surplus.  In addition, ICO lowered its global 2020/21 its global 2020/21 coffee production estimate to 167.17 mln bags from 168.88 mln bags and raised its 2020/21 global coffee consumption estimate to 170.30 mln bags from 167.68 mln bags.  However, Citigroup on May 4 projected that the 2022/23 global coffee market would shift to a surplus of +3.5 mln bags from a 2021/22 global coffee deficit of -7.3 mln bags.

Drought and frost events devastated Brazil's coffee crop last year and have curbed the growth potential for the country's coffee crop for the next two years.  Conab reported Dec 16 that Brazil's 2021 arabica coffee production fell to 31.4 mln bags, down -36% from 48.8 mln bags in 2020.  The USDA's FAS projects that Brazil's 2021/22 coffee exports would tumble by -27% y/y to 33.2 mln bags from a record 45.67 mln bags in 2020/21 as drought and frosts curbed coffee production.  However, Conab on Jan 18 projected that Brazil's 2022 coffee production would recover by +16.8% y/y to 55.7 mln bags.