Brazilian Coffee Production and Markets
Coffee is an extremely popular drink and has numerous health benefits, when consumed in moderation. Therefore, it is one of the most widely produced agricultural commodities in the world. Under the ticker symbol KC, coffee is traded at the Brazilian Mercantile and Futures Exchange, the Intercontinental Exchange (ICE), the Kansai Commodities Exchange, and the Multi Commodity Exchange, amongst several others. Even though it is believed that coffee originated around the northern regions of East Africa, today, the largest coffee producing regions in the world are Southeast Asia and Latin America. Within the coffee market, there are two main types of beans, Arabica and Robusta (or Conilon). Robusta beans, which are mainly produced in Southeast Asia, yield a bitterer and less caffeinated coffee than Arabica beans. Therefore, Arabica beans, which are mainly grown in Latin America, secure higher prices in the international markets. Because of their higher quality, as well as market preferences, Arabica beans account for more than half of the global production. This article explores coffee production and markets in Brazil.
Brazilian Coffee Production and Markets
Brazil is a world leader within the coffee production and export markets. During the 2016/17 season, Brazil is expected to produce 56.1 million 60-kg bags or 3.4 billion kilograms of coffee, accounting for both Robusta and Arabica beans. This represents a substantial increase from the production during 2015/16, which totaled 49.4 million 60-kg bags. Coffee cultivation in Brazil is concentrated in the states of Parana, São Paulo, Minas Gerais, and Espirito Santo. Nationally, Arabica beans dominate coffee production within Brazil accounting for approximately 75% of the overall output. Robusta production in Brazil has experienced a decrease the last couple of years due to lack of rain during the harvest season, which ends around October, particularly in the state of Espirito Santo.
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In terms of the domestic markets, Brazilian consumption of coffee for 2016/17 is estimated at 20.5 million 60-kg bags. The pricing of Brazilian coffee, both domestically and international, is closely related to the quality of the bean, foreign exchange markets, and global supply. Within Brazil, the average price for a 60-kg bag of coffee during 2015 and 2016 has ranged from around US$120 to US$155. In recent years, Brazilian and Latin American producers of Arabica beans have faced strong competition from the Robusta producers in Southeast Asia, who sell their product at a lower price.
When it comes to trade, Brazil exports most of its coffee production, mainly to the United States and Germany. In fact, Brazilian coffee exports dominate international markets representing one-third of all international coffee sales. Most Brazilian coffee is exported as a commodity in the form of green beans before any processing. During 2016/17, green coffee exports from Brazil are expected to total 31 million 60-kg bags. Meanwhile, Brazilian grounded coffee exports should account for 3.2 million 60-kg bags during 2016/17. In total, Brazilian coffee exports will reach approximately 34.2 million 60-kg bags for this time period.
(Read more about Contemporary Brazilian Fruit Production and Trade)