Brazil's 2020 coffee crop just shy of record as production area grows

Brazil's 2020 coffee crop is seen reaching a near-record volume as the area under production in the world's largest exporter grows for the first time since 2012, government agency Conab said in a study released on Thursday.

In its first estimate for the new crop, Conab said Brazilian farmers would produce between 57.15 million 60-kg bags and 62 million bags, with the midpoint at 59.6 million bags.

That would be just shy of the all-time output peak of 61.65 million bags reached in 2018. Production in 2019, an off year in the biennial production cycle, was seen at 49.3 million bags.

Brazil alternates years of high and low production, due to the natural cycle of arabica coffee trees that make the most of the fields in Brazil. Robusta production is usually more stable.

Conab said the area under production in Brazil, which has been falling for several years, increased in 2020 by 4% from 2019 to 1.88 million hectares. That could have guaranteed a new production record in 2020, but the agency said that dryer and hotter than normal weather after the main flowering late last year reduced potential yields.

The increase in the area under production could raise some eyebrows in the industry since coffee prices have been hovering around the lowest levels in a decade until recently. Prices recovered some late in 2019 and in January, although they fell again in the last few days.

Conab says those gains in area are the result of increases made years ago that only now entered production (coffee trees need some three years to start producing). Currently, it says, the amount of areas being developed to produce coffee is falling heavily, 14% down from 2019, for example.

Brazil's 2020 arabica coffee production is expected to rise by between 26% and 34.1% from 2019 given the "on-year" in the biennial production cycle. Conab said Brazilian farmers will harvest an estimated 43.2 million to 45.98 million 60-kg bags of arabica coffee this year.

Robusta production is seen between 13.95 million to 16.04 million bags, or varying between -7.1% and 6.8% from 2019. Arabica beans make most of the volume used by makers of high-quality brands, while robusta is widely used to produce instant coffee.