With better harvests projected, coffee and sugarcane may fall in price

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The expectation of an increase in the production of commodities such as coffee and sugar cane, this year, may reduce the price of its derivatives for the final consumer, according to an analysis by Safras & Mercado, an agribusiness consultancy.

However, for the reduction to effectively reach the Brazilian pocket, the world economic scenario needs to contribute.

Data from the Brazilian Institute of Geography and Statistics (IBGE) project that coffee and sugarcane crops will have an increase of 16.7% and 19%, respectively, in production in 2022 compared to last year.

In 2021, due to the lack of rains, the production of these two commodities was strongly impacted, causing the inflation of refined sugar to reach 40%, and of ground coffee, 42%, according to the National Consumer Price Index. Broad (IPCA).

Analyst Gil Carlos Barabach, from consulting firm Safras & Mercado, says that there is a change in the production curve in the sector. He points out that, if the IBGE’s expectation comes true, the price reduction should start after the second half of this year, and will be effectively felt next year.

“We come from a coffee crop last year, which had a very sharp drop. This year, we are seeing a reversal in this process and this will undoubtedly affect price. I would say that it affects more sugarcane than coffee, because coffee, due to last year’s weather, has already lost part of its productive potential, it is a larger crop, but with a productive potential still below normal”, he evaluates.

The problems in the last crop appeared in supermarkets. According to data from the Inter-union Department of Statistics and Socioeconomic Studies (Dieese), in March of this year, the average price per kg of coffee was R$ 39.08.

In March 2021, the same product cost BRL 22.68. Refined sugar, on the other hand, had an increase of R$ 1.34, from R$ 2.90 a Kg, in March last year, to R$ 4.24 in March this year.

Ethanol, a fuel derived mainly from sugarcane in Brazil, registered a price increase of 51.16% last year, according to the IBGE. According to data from the National Agency of Petroleum, Natural Gas and Biofuels (ANP), currently the average value of a liter of fuel in Brazil is R$ 5.44.

According to the latest bulletin for the 2022/2023 sugarcane harvest, from the National Supply Company (Conab), the expectation is that the end of the Covid-19 pandemic will favor the heating of domestic demand for fuel, which can limit exports and encourage imports of biofuel.

With the import rate for this product zero by the end of the year, this measure should directly impact the price.

“Since last year, as we have seen, the market has priced the bad harvest, but what is actually happening now, in the case of these products, is the physical arrival of this harvest. The beginning of the coffee harvest and the advance of the harvesting and milling of sugarcane are already affecting prices”, says economist Gil Carlos Barabach.

Crop expectations in 2022

Brazil should have a record crop of cereals, legumes and oilseeds in 2022: it will be 261.5 million tons, according to the projection of the Systematic Survey of Agricultural Production, released this Thursday (12) by the Brazilian Institute of Geography and Statistics (IBGE) . The volume is 3.3% higher than last year.

Although the numbers are positive, researchers point out that the products suffered from adverse climatic effects that reduced the production potential. Among them, a drought in the Center-South of the country, softened in some crops by the return of rains in January.

The phenomenon will have an impact on soybeans, for example. The IBGE projects that the country’s main commodity will have a harvest of 118.5 million tons, a volume 12.2% lower than that achieved in 2021.

Source: CNN Brasil

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