US Coffee C Futures - Jul 24 (KCN4)

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Alysson: "What draws general attention is the very bad sieve, this already shows that it will have a significant impact on the yield of the crop, it is a coffee with a smaller sieve, this is already clear in the south of Minas Gerais as a whole". Alysson attributes the lower sieve factor to the weather conditions recorded between the months of October and December. "The coffee didn't grow as much as it needed to, there was a lack of water and high temperatures, so the coffee couldn't grow normally."

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Viriato Magalhaes 31 minutes ago

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Jose Marcus Magalhaes, Minasul: We were waiting for the rains to allow for more adequate grain filling, but the first grains are low. Today it is at maximum sieve 14, normally at the beginning of the harvest it is low, but we are finding it a little lower than average. We hope that the sieve improve now with the other blooms that have occurred", he states. Exactly as Rodrigo said about the beginning of the harvest...

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ShortDude 15 minutes ago

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Viriato, It looks like the mix of bad news for crop yields for the 24-25 season is starting to be confirmed by more and more sources. Flowering for 25-26 has also already encountered problems in several places. I believe Brazil enter the new season with very low stocks. Brazil has next OFF season. What do you think? What price levels can Arabica reach?

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Viriato Magalhaes May 18, 2024 10:27AM ET

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Short Dude. Sensation or not - who knows :) ? But this is NEW 2.1mb R reduction that you have to subtract now from stocks or to adjust global production for 23/24. Thus, it provides a new balance for 23/24. If, by USDA , previous balance was 169.5mb consumption vs 171.4mb production, after this new R 2.1mb revision it is 169.5mb consumption vs 169.3mb production :) (assuming this specific R revision only !). The percentage of reduction is 25% (big) and it shows that USDA is not immune of big overvaluations indeed from one side, and quite serious weather influence on the other :). If I remember correctly, last time Indonesia produced R below 7mb in 2011 or so... By my rough calcs, after reports that have been out already, 23/24 production has to be adjusted by -3mb, assuming A+R up/down revisions made. Thus, new 23/24 COSM vs PROD would be 169.5mb vs 168.4mb.

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Viriato Magalhaes May 18, 2024 10:27AM ET

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Maja posted from Veracruz and shown some pics. No devastated farms... But not higher yield :) :) :) would be considered assuming weather issues recorded and ongoing. USDA hadn't see any problem now, while projecting 24/25, and stated just that: no higher yield. How USDA would project the loss, if it is impossible to calculate it at this stage ? 3% 5% ? 10% ? Put 10% - you'll create more panic, put 3% - means nothing for Mexico... Thus, the best approach is to declare flat and wait and see. Without irony at all, as USDA doesn't want market to blow. But USDA will not hesitate to adjust it for whatever percent on later basis as the market will adjust itself already well before that. :) But the one should not fool himself: 1) every flat projection for 24/25 is not good as it points to Brazil even more :); 2) back years revisions are taken into the account by big market players as the exports; 3) next crop is OFF crop.

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Viriato Magalhaes May 18, 2024 10:27AM ET

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Comments I've seen re MG : expectation was about 15% up, can end up down 2%, 3%,... up to 5%. MAY BE ! only, but if it would - would be fully intact with science and weather. 3% of MG would be 1mb or so... Same about ES, besides there was a historical precedent for ES, well documented. All may not happen at all. But if it will, 5% for ES and 3% for MG will make roughly another 2mb.

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MGom 22 hours ago

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Viriato Magalhaes With the volume exported by Brazil 23/24, I imagine that we will have a major review for Brazil 23/24 production.

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MGom May 17, 2024 8:32PM ET

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Tks Viriato ... The USDA reports have landed in my Spam folder, I can now read them again.

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Viriato Magalhaes May 17, 2024 8:32PM ET

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:) :) :) I was way too much - I know :) ! I'll stop spamming on this :). No agitation or prophecy - just wanted to get some feedback from the ground, etc. The rest of the month is full of reports - we'll see it all, including ECF stocks.

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MGom 22 hours ago

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CONAB in the next few days

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Viriato Magalhaes May 17, 2024 3:15PM ET

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Indonesia: 24/25 A+R projected to be 10.9mb, R - 9.5mb, A - 1.4mb. 23/24 A+R revised from Nov 2023 9.7mb (A - 1.3mb, R - 8.4mb) to ... 7.7mb, A - 1.4mb, R - 6.3mb. A roughly flat, R revised down for 23/24 for 8.4mb - 6.3mb = 2.1mb !!!

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Viriato Magalhaes May 17, 2024 3:15PM ET

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Mexico: Projection for 24/25 - 3.895mb, A - 3.35mb, R - 545kb, average yield . MY 23/24 revised down for A from 3.545mb to 3.316mb, R stays flat at 545kb. Arabica revision: 545 - 316 = -229kb, in percentage 229/3545 = 6.5%. 22/23 Mexico A production was revised 300kb. :)

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Viriato Magalhaes May 17, 2024 3:15PM ET

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Short Dude: 1) Indonesia: USDA revised 23/24 R production from 8.4mb to 6.3mb, 2.1mb to subtract from global balance; A production for 23/24 was revised up from 1.3mb to 1.4mb; USDA projected for 24/25 R as of 9.5mb (increase of 3.4mb or about 50% !!! :)), A to stay flat as of same 1.4mb. Combined reduction down for 23/24 is: 2mb.

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ShortDude May 17, 2024 3:15PM ET

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But the 23/24 crop is history, harvested and sold, so is this revision such a big sensation? More interesting should be the forecast for 24/25? It's a bit strange that R is expected to increase by 50%, seems unrealistic!

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Viriato Magalhaes May 17, 2024 3:15PM ET

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Short Dude. In relation to Indonesia it means that revision decreased 23/24 R production for 2.1mb ADDITIONALLY to what you new before, so R global balance for 23/24 should be adjusted accordingly (lower R stocks for this amount somewhere). 2.1/8.4 x 100% = 25% - this is the example of overestimation USDA did at the time :). For simplicity, you may adjust 24/25 stocks for such a USDA adjustment, etc. If in fact 23/24 R in Indonesia was 6.3mb and 24/25 is projected 9.4mb, in relation to 23/24 base :) it is 50% increase in one year !!! Brazil gets jealous and nervous !!! :) For India, as example, adjustment would produce about 250kb, etc. From all the reported origins till now, a total correction to downside (production/stocks) that has to be applied to a global balance, is roughly 3mb already. :) We still have Vietnam, Brazil, Ethiopia, Uganda, Honduras, Peru, Nicaragua, etc to report. To reach my 5mb, to which we'll need to add 3mb of consumption growth, we need just 2mb.

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Viriato Magalhaes May 17, 2024 3:15PM ET

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Till now, all of the reported origins have shown revision to the downside and besides Indonesia, flat projections. 50% growth for R in one year, even basing on big drop previously (but flat area) - :) :) :) ! USDA approach is simple: 1) No panic is needed; 2) as potential loss can be somehow big, no reason to guess it but to project flat 24/25 and then to see how and what; 3) remember :) - at the time when projection is made, forecaster considers that going forward all meaningful factors will not work against the projection. It is perfectly normal (you can't forecast otherwise :)) but current circumstances and coverage is once in a while issue (300 years or so). Karnataka produces about 70%, suffers drought, it will not kill the farms, etc, clear, but can it produce more in such circumstances ? Honest answer would be NO. If sun and high temps have been able to cause abortion and smaller beans in ES for conilon, will R act differently in the same conditions :) ? Let's wait for CONAB and look at ES figures.

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Viriato Magalhaes May 16, 2024 6:38PM ET

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Costa Rica came out being projected for 24/25 1.185mb (POST) vs 1.144mb USDA for 23/24, reduction 255mb, executive summary not optimistic :), rising consumption. (Production in 22/23 was roughly 1.4mb). Guatemala, El Salvador and Costa Rica combined reduction roughly 550mb, rounding a bit to bigger side :). In percentage reduction about 17%. Intact with El Salvador :).

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Viriato Magalhaes May 16, 2024 6:38PM ET

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If R in ES will be proven affected (by Nov 2023 high temps, as example, and we'll see this fact admitted :), then some surprise for A in MG seems to be obvious, as if more resistant R suffered somehow, how A will avoid it ? Arabica doesn't need a drop - just the same figures will be considered bad ones :).

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ShortDude May 16, 2024 6:38PM ET

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Exactly, a cocoa-like scenario. Two countries account for well over 50% of production. That is why the market is still waiting, even though it is already clear that the small ones have a problem, but maybe the mighty Brazil will save the world again?

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Viriato Magalhaes May 16, 2024 6:38PM ET

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I saw videos, produced in ES, starting from Nov 2023 and then every couple of months, showing development of the problem. Green trees but less beans and some are smaller - exactly, as it is described in the studies. And no emotional comments and full explanation that it is different for every farm as it depends on altitude, location, density, irrigation, age of trees, etc - one to one as in the studies. And conclusion about drop for a ES as a state, made on the weather stations data in the state without particular numbers of possible drop. No panic, just admittance of the fact. Brazil is absolutely amazing when it comes to research, practices, clones, education and promotion of new product, but it is not immune weather wise. Logically, some new/modified pests/diseases should be next and/or higher infestations. Nobody knows at this point but the news should be watched. At the time rust made a lot of damage in CA and not only !

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Viriato Magalhaes May 16, 2024 6:38PM ET

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Maja finally commented on Mexico 24/25 expectation: not optimistic :) at all, it's gonna be a smaller crop. USDA is next :).

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Viriato Magalhaes May 16, 2024 6:38PM ET

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Sorry, CONAB is next. USDA will tune CONAB :).

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Viriato Magalhaes May 16, 2024 3:23PM ET

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Well, here comes Costa Rica: FAS/San José projects marketing year 2024/25 coffee production to remain near record low levels, as exchange rate challenges, persistent labor shortages, and above average precipitation forecasts prevent the sector from rebounding. Sluggish export sales in 2024 are exacerbating already challenging financial and agronomic conditions for Costa Rica’s nearly 27,000 coffee growers, who are likely to delay or reduce investments in rust resistant varieties, fertilizer applications, and other cultural practices 22/23 - roughly 1.4mb; 23/24 - decreased from 1.44mb to 1.181mb (POST), -18% revision :), 24/25 projection (POST) - 1.185mb, increase of ...4kb :) :) :). Consumption rising from 385kb 22/23 to 415kb 23/24 to (projected) 420kb 24/25 (POST). 1.44 - 1.181 = 259kb to subtract from global balance. Follows Guatemala and El Salvador.

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Viriato Magalhaes May 16, 2024 3:23PM ET

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Almost unchanged means from previously revised for -259kb number :). Summary doesn't sound optimistic. Up to now, El Salvador, Guatemala and Costa Rica combined subtracted from global balance about 550kb :) or 10% from may be would be 5mb :). Nobody knows, but I would risk to say that summary for CR doesn't point to any increase in production (4kb :)) in 24/25. If we would keep USDA number for 23/24 as one and only valid (not POST), then we would call it just :) projected decrease in production for 18% from 23/24 to 24/25 :). Nicaragua and Honduras are next :).

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Viriato Magalhaes May 16, 2024 3:23PM ET

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For fun: funds are getting/reading same reports and see same figures/comments as all of us here :).

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Viriato Magalhaes May 15, 2024 9:44PM ET

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As harvest has started, Noticias agricolas, 15/05/24: (In practically all locations, producers have reported low yields at this early stage of the harvest, with lower quality for the youngest coffees, which are green and small, with little sieve 17 above, as explained by Cepea researchers. For Robusta, the harvest in Rondônia and Espírito Santo is ahead of Arabica, as usual, but the low quality scenario for these first batches is also verified. According to data analyzed by Cepea, in Rondônia, around 30% of the coffee has already been harvested; and, in Espírito Santo, between 10% and 20%. ) This just first impression for sure as the harvest just started. Though 30% for RO and roughly 15% for ES would be :) more indicative than 5-10% for Arabica.

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Viriato Magalhaes May 15, 2024 9:44PM ET

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Municipalities covered by the study (9 not 10:)): Boa Esperanca, Colatina, Jaguare, Linhares, Nova Venecia, Pinheiros, Rio Bananal, Sao Mateus, Vila Valerio. Alisson (agronomist) from procafe previously mentioned several times that current season reminds him a lot 15/16. Thus, Icaper comments may not get realized :) (there is always some magic in the brazilian air) but they have the ground :).

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Viriato Magalhaes May 15, 2024 9:44PM ET

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From meteorological standpoint, drought has specific definition. When drought, solar radiation and high temperature present all at once (to a high degree) - it's a double trouble :) ! Or, in scientific language - multidimensional stress ! (DaMatta, 2003) DaMatta is my favorite guy ! I'm not sure he has time to drink coffee as he researches coffee all of his time :) :) :) ! Another good thing to know: there were successful cultivars created to resist the drought but not high temps :).

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Viriato Magalhaes May 15, 2024 9:44PM ET

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Even moderately high temperatures may affect crop productivity, by changing the balance between respiration and photosynthesis, the latter being increased to a greater extent, and to inadequate storage capacity. Economic production often depends on the development of organs like leaves and fruits, which under excessive high temperatures can grow too fast in relation to the available photosynthetic resources, resulting, e.g., in small leaves and shrunken fruits.

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Viriato Magalhaes May 15, 2024 9:44PM ET

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Final: Therefore, in our opinion, the coffee plant possesses a higher tolerance to elevated temperatures than most classical work seems to indicate. Otherwise, coffee productivity would be quite low in tropical environments, where leaf temperature easily reaches values above 30ºC during a great part of the day, especially in the outer leaves of the canopy, as already noted by DaMatta (2004a). Furthermore, rates of both photosynthesis and vegetative growth of the coffee tree are maximal throughout the warm season, as occurs in the main Brazilian producing areas (Silva et al., 2004). Therefore, in our opinion, the coffee plant possesses a higher tolerance to elevated temperatures than most classical work seems to indicate. Otherwise, coffee productivity would be quite low in tropical environments, where leaf temperature easily reaches values above 30ºC during a great part of the day, especially in the outer leaves of the canopy, as already noted by DaMatta (2004a). Furthermore, rates of both photosynthesis and vegetative growth of the coffee tree are maximal throughout the warm season, as occurs in the main Brazilian producing areas (Silva et al., 2004).

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Viriato Magalhaes May 15, 2024 9:44PM ET

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Coffee cultivation in the open is the usual practice in many parts of the world, and this provokes leaf exposure to high irradiance and the absorption of much more energy than that usable by photosynthesis. Such conditions may cause an energy overcharge and to an overheating of leaves that, in extreme cases, can reach temperatures of 40ºC or even above (Maestri et al., 2001), especially if stomata are closed, as occurs on sunny days in unshaded plantations . Only under these extreme conditions of high irradiance would the negative effects of high temperatures in fact promote leaf chlorosis and burning. To make a long story short :), it makes no sense to expect of devastation but without any doubts, high temps alone affect the vegetative function and the yield. And this is where the game of numbers starts: if, as example, only 10% of farms were affected to a dangerous extent or 50% ? In a case for ES 14/15, 15/16 as specific study has shown, coverage was serious.

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Alpha Centauri May 15, 2024 10:57AM ET

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OJ at fresh ATH :)

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Fudbal Fudbalko May 15, 2024 10:57AM ET

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It has everything to do with the price, and it has nothing to do with the price

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Viriato Magalhaes May 15, 2024 9:16AM ET

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Incaper: conilon cultivars for ES, yielding between 50 and 60b/ha (within first 4 years, non-irrigated) are known since 1993, most productive (at the time !) was launched in 2004 and yielded on average 70b/ha in first 8 non-irrigated crops, while improved clone reached about 120b/ha :). But for desired yield, tech recommendations and specific practices had to be followed. Thus, CONAB's yields of 54b/ha for RO and BA are nothing strange, assuming now is 2024 :), but ES yield of 42b/ha should have some meaning :) :) :).

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Viriato Magalhaes May 15, 2024 9:16AM ET

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In normal conditions, the temp of the leaf usually would be lower or within roughly +/-2C of the air temp. But when conditions are not that good, for instance, the soil is dry, no sign of wind :), etc - leaf temp may get over air temp for about 5-6C. As the result, less flowers and fruits can be produced by the tree, etc. This or that way valid for practically all plants. Conservatively, optimal range for arabica was considered as 18 - 23C, then it became roughly 14 - 28C, for R it was initially about 20 - 26C and then 20 - 30C, optimal means yield :). But as many studies show, tolerance should not be mixed up with optimal conditions. The ability to tolerate some temps does not always :) provide optimal yield. It depends on many other factors as well, but dry spells and high temps (high temps/humidity) by science :) do not support great yield.

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Viriato Magalhaes May 15, 2024 9:16AM ET

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A bit new pest, published Jan 23, 2024, CampoVivo, spotted N do ES and SDB: New species of mealybug The morphology of the Pseudococusela Group is very different from the root/rosette mealybug. It has two filaments on its body and greater mobility, ovules intensely and potentially generates 200 new mealybugs every 15/20 days, which spread very quickly in the field. The form of reproduction combined with the favorable (hot) climate has made management difficult, as despite spraying reducing the pest population, many nymphs remain and new eggs hatch between 5 and 8 days, which makes it difficult to break the cycle, not to mention with the protection that it creates with this “ball of wool” that is formed by the plague.

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Viriato Magalhaes May 15, 2024 9:16AM ET

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So, higher infestation is in play: Since last year, a problem has been taking away the peace of many coffee growers: the difficulty in controlling the mealybug from the Pseudococcus group, a new species that has affected conilon coffee plantations in the North of Espírito Santo and the South of Bahia. The dry period and low humidity have been pointed out as the causes of this scenario in the coffee plantations. ... this new Pseudococcus Group does not settle in the roots, but attacks branches, leaves and fruits. The pest has been causing damage since the middle of the second half of 2023, when heat and high temperatures intensified.

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Viriato Magalhaes May 15, 2024 9:16AM ET

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For fun: Young mealy bugs can be spread over long distances by wind. Adults can be carried by ants that travel from affected to unaffected plants. Ants also protect the mealy bugs from predatory insects. Therefore, controlling ants will allow predators to feed and reduce mealy bugs.

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Viriato Magalhaes May 15, 2024 9:16AM ET

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It was pointed out several times already :), but many :) :) :) other origins are not that advanced as Brazil is. What doesn't mean that the pest, etc should devastate every farm :), but most likely means that yield loss would be a bit bigger than in Brazil, if the pest is present and all the factors being equal. I would also risk to say the same about fungus. Besides, some studies confirm that high temperatures (longer periods) provoke mutations of fungus (different ones) and it starts often when temp crosses roughly 37C, etc. In some cases mutations increase can be 3-fold,4-fold,5-fold, etc... Not each new mutation would be more dangerous, but some usually are...

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