Brazil Coffee Update: Institutions Predict Brazil's 2021 Coffee Production at 52.01 Million Bags

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Brazil Coffee Production Forecast for 2021/22 Season

As 2021 marks Brazil's biennial coffee production cycle, combined with the drought season in 2020, global institutions have made predictions for Brazil's 2021/22 coffee production season. The estimated average total coffee production for Brazil is projected at 52.01 million bags (60 kg per bag).

Arabica and Robusta Production Estimates

The production estimates for Brazil's Arabica and Robusta coffee beans in the 2021/22 season are as follows:

Last year, Brazil's main Arabica coffee-producing region, Minas Gerais state, was most severely affected by drought. It is expected that this region's production will decrease by 42% this year. Another Brazilian Arabica-producing region was also affected by the drought, though not as severely as Minas Gerais. Various institutions predict that the average total production of Brazil's Arabica coffee will be 32.22 million bags, representing a decrease of 21%-31% compared to the same period.

Conversely, the main Robusta-producing regions experienced the opposite effect. Last year's drought had no impact on the two major Robusta-producing regions, Bahia and Espírito Santo states. Coupled with crop improvements and careful cultivation, various institutions predict that Brazil's Robusta coffee production will average 19.8 million bags, representing an increase of 16%-18% compared to the same period.

Rising Arabica Prices Amid Production Decline and Economic Uncertainty

Due to declining Brazilian coffee production and economic instability caused by COVID-19, Brazil's Arabica coffee bean prices are expected to continue rising throughout 2021!

As Brazil enters winter, there are signs of COVID-19 worsening again. On March 19, Brazil recorded 90,570 new daily cases, setting a new record since the pandemic began. With the pandemic deteriorating and Brazil's economic uncertainty causing continuous depreciation of the Brazilian real, this will drive up Brazilian coffee spot prices. In March this year, Brazil's domestic Arabica coffee spot price already reached a record 740 reais per bag (equivalent to $134 per bag), and this upward trend is expected to continue.

Potential Supply Shortage Amid Growing Domestic Consumption

Will Brazil's Arabica coffee face insufficient market supply as domestic consumption increases?

According to data from the Brazilian Coffee Industry Association, between November 2019 and October 2020, Brazil consumed a total of 21.2 million bags of coffee domestically, a slight increase from the previous year's 20.9 million bags. The market expects that as more people begin trying coffee at home, future demand for high-quality Arabica coffee may further increase.

If domestic demand for Arabica coffee beans increases in Brazil, combined with the reduced Arabica coffee bean production in the 2021/22 season, this could result in insufficient remaining supply after meeting Brazil's domestic needs to meet the demands of global coffee traders.

Early Pre-Sales of 2021/22 Coffee Production

Brazil has already pre-sold 28% of its 2021/22 coffee production by early March.

Safras & Consultoria data shows that as of March 10, Brazil had already pre-sold 28% of this year's coffee production, significantly higher than the 18% from the same period last year. The institution also stated that the higher sales percentage this year is mainly due to severe production reduction, especially in Arabica coffee. Currently, Brazil's Arabica coffee pre-sales have reached 35%.

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