ICE US Coffee C Futures - Mar 25 (KCc4)

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Colombia was expected, figure was not clear but it was expected since Dec 2023 WM and T report. It has to be assumed that when previous USDA projection for 23/24 production was made, it was made on the production numbers, projected in 2023 reports and then some adjustments (if any) in World Markets and Trade report of Dec 2023. Thus, while projections for 24/25 are still projections only, reduction on previous 23/24 (22/23) numbers, in fact, form almost final :) view at 23/24. So far projections 24/25 are flat on gross reduction on 23/24.

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Viriato Magalhaes 7 hours ago

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Short Dude. Some comments from some farmers in a farmers chat. Either conspiracy and too much coffee consumed personally, or something is coming :) :) :). Examples: 1) In addition to low quality, 15 to 50% breakage vs 23 crop (BA); 2) 40 or 50% drop in conilon, a lot of breakage while drying; 3)in my area drop will be 25 - 30%; 4) in my area arabica will be 30% off; 5) in my area of ES normally 42 - 45b/ha, this year - 32 - 38b/ha; 6) Zona da Mata (some area) : I thought I was going to harvest 1500 bags, it looks I'll not harvest 700 bags; 6) Jaguare - drop 40%; 7) Sun affected too much in the end of 2023, the grain did not have a normal development; 8) Conilon breakage is about 50%, etc. (Breakage is a breakage during drying due to already too dry beans and high temps.)

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Viriato Magalhaes 7 hours ago

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Roughly, all reductions made till now give 5.5mb and subtracting Colombian surplus ---> roughly -4.5mb.

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Viriato Magalhaes 7 hours ago

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(ES comment would point to roughly 10% decrease in production.)

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Viriato Magalhaes 7 hours ago

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39.4C in Sombrerete, Zacatecas, at ... 2354m asl :).

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ShortDude 1 hour ago

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Viriato, let's see if the market sees the same summary as you do :) And whether the price will react to it. Farmers in my country, also always complaining, I don't remember a year that they were satisfied with the crop. When yields are good, they also complain because then prices are low ;) The rumors are interesting, but you have to take the farmers' bias into account! If we listened only to famers and Maja, the price should already be at 5 or higher!

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Viriato Magalhaes 13 hours ago

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Honduras: 22/23 - reduction of 300kb; 23/24 : USDA - 6.5mb, POST - 5.5mb !!! (POST projection in 2023 for 23/24 was 7.92mb, now it is 5.5mb ... 2.42mb lower !!! ); projection 24/25 - 5.5mb.

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Viriato Magalhaes 13 hours ago

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Honduras report is very confusing as it reflects POST's high level of uncertainty: 7.92mb vs 5.5mb for 23/24 = 2.42mb or 31% for a small production... As it is POST who is on the ground, the probability is high, that 5.5mb figure for 23/24 will be assumed in 2025 report. If this will be the case, total reduction vs previous projection for 23/24 will be 2.42mb ! Otherwise, it is 6.5mb vs previously projected 7.92mb = - 1.42mb. Assuming both reductions, 22/23 and 23/24 --1.72mb. And 24/25 projection of 5.5mb vs current 23/24 of 6.5mb is a projection of 1mb ... lower.

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Viriato Magalhaes 13 hours ago

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Honduras is a good example. For the diff between 7.92mb and 5.5mb serious concerns have to be in play or, on the other hand, impossibility to come with more or less reasonable algorithm. Confusion in other words...

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Viriato Magalhaes 14 hours ago

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Peru: 22/23 revised from 4.2mb to 3.4mb, 23/24 - 4.2mb, 24/25 projected - 4.22mb, 22/23 reduction 800kb, 24/25 vs 23/24 - flat.

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Viriato Magalhaes 14 hours ago

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Consumption growth - about 4%.

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Viriato Magalhaes 14 hours ago

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Nicaragua: FAS/Managua anticipates coffee production in marketing year 2024/25 to rebound to 2.6 million 60- kilogram bags, as a return to average precipitation levels should support historical average yields. However, Nicaraguan coffee growers face global structural headwinds in marketing year 2024/25 on top of tight labor supplies needed to bring in the hand-picked coffee harvest. Dry conditions, reduced production, and delayed harvesting – all associated with the 2023 El Niño weather system – reduced overall coffee production in marketing year 2023/24 by ten percent.

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Viriato Magalhaes 14 hours ago

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R is flat last 3 MY. A, assuming reduction 10% reduction for 23/24. looks like: 22/23 - 2.5mb, 23/24 USDA - 2.5mb, POST - 2.25mb, 24/25 projection - 2.45mb. Thus, if to consider POST for 23/24 to become final number (usually is), -250kb. Or flat as it would be enough also :)...

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Viriato Magalhaes 14 hours ago

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Colombia: production for 23/24 was revised up to 12.2mb from 11.5mb (WM and T, dec 2023) previously projected, 24/25 is projected to reach 12.4mb, 200kb more vs 23/24. Increased rates of borer infestation admitted as Oscar was saying for months... Thus, 700kb should added to global balance :) 23/24 and roughly, 24/25 vs 23/24 production is seen ... flat.

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Viriato Magalhaes 14 hours ago

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From Barchart news (just part of news): In a bearish factor, the International Coffee Organization (ICO) projected on May 3 that 2023/24 global coffee production would climb +5.8% y/y to 178 million bags due to an exceptional off-biennial crop year. ICO also projects global 2023/24 coffee consumption will rise +2.2% y/y to 177 million bags, resulting in a 1 million bag coffee surplus.

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Viriato Magalhaes 14 hours ago

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USDA in its last WM and T report of Dec 2023 saw production for 23/24 as 171.4mb, consumption as 169.5mb. Both, ICO and USDA see 23/24 production higher 1mb than consumption and somehow ICO saw bigger production... :) So, the question is: if production growth was due to exceptional OFF cycle, does it mean that Brazil produced more than USDA thinks it did, or other origins somehow coordinated their cycles with Brazil ? :)

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Viriato Magalhaes May 19, 2024 2:46PM ET

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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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Oscar Correa 18 hours ago

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Density is a substance's mass per unit of volumen. 0,7 to 0,75 grams per ml is the ideal range for density of coffee. So the weigh of a liter of coffee would be 700 to 750 grams. To fill a liter can with small beans you wold need more of them. Is It clear now or do you need more explanation?

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Bruno O Souza 17 hours ago

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Oscar Correa thank you Oscar, old man typing without glasses

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Viriato Magalhaes 16 hours ago

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Short Dude. Let's look at possible scenario for 25/26, Brazil, basing on current situation: 1) high temps and dry spells affected 25/26 crop as vegetative function was stressed (branches/leaves) and so, by definition :), less fruits may be (should be :)) produced; 2) higher rust rates were detected in SDM already - the rates may get higher on more weather issues, new infestation, etc; 3) 25/26 is OFF crop for A; 4) ES (R) 25/26 may get affected also as it was the case in 15/16 and after - combined effect on 25/26 crop in this case will be bigger; 5) all origins (lots!), affected in 23/24 on high temps/dry spells basis, will produce smaller crops in 25/26 as the result (science, A is 2 years crop :)) and it will fall on OFF crop in Brazil. :) :) :) :) :) P.S. Hurricanes ---> CA, higher fungus/pests in other origins, big mealybug problem in Vietnam :). All fantasy for now :) but if to consider in a very conservative way the market will get: A) roughly 5mb less on Brazil OFF cycle; B) 3mb consumption growth at 1.75%; C) 5mb all other origins combined. In total - 13mb. And 5mb for OFF cycle is really conservative, as it usually is within 10 - 20% range and ES possible drop and higher fungus/pest effect are not counted. :) So, it may be 15mb :), etc. That will make 2026 the year of Big Hope ! :) ( However, 2026 may surprise with a double La Nina (continuing) and drought in MG as couple of virtual :) studies, based on 100 years of drought history in MG, have shown possibility of a real drought in Brazil in 2026 :).).

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Viriato Magalhaes 16 hours ago

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Alysson from Procafe confirmed that Arabica best temps range is still 21-23C :). He knows well which cultivars are grown in SDM so, can be trusted :).

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Rodrigo Faria 12 hours ago

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Bruno, the maturation of coffees from the Cerrado is more advanced compared to the South of Minas. What can you tell us about the region’s income?

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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 May 18, 2024 10:27AM ET

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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 May 17, 2024 8:32PM ET

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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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