In total Arab countries spent US$84.9m to buy more than 655,000 60kg bags of coffee between January and May this year, compared to US$92m for around 546,000 bags last year, according to the Brazilian Coffee Exporter Council (Cecafé). Around 5% of Brazil’s coffee exports now go to the Arab world, following the increase in volume.
Growing coffee trade
These latest figures mark the continuation of a growing coffee trade between Brazil and the Arab world. Last year total exports to Arab countries were up 36% by volume year-on-year, reaching 1.49 million bags. In 2013 too, revenues failed to keep pace with volume, growing only 5.7% to reach US$222.9m.
Detailed figures for country-level imports in the region are patchy, but figures from the International Coffee Organisation (ICO) suggest Lebanon and Jordan are significant regional importers of coffee. For Brazilian coffee exporter Império Café, Jordan was its largest regional market in 2013.
“The Arab country that purchased the most was Jordan. In general, importers bought the product for consumption in the country itself, and not for resale,” said Henry Stefenoni, director of Império Café, speaking to the Brazil-Arab News Agency earlier this year.
Uncertainty drives prices
While recent years have seen dramatic falls in Brazilian coffee prices, the trend may be reversed in the near future, due to a severe drought in Brazil which is predicted to have a significant impact on its coffee harvest this year. Last month the Brazilian coffee authority Conab cut its harvest forecast by nearly 4 million bags to 44.57 million bags.
However, according to the ICO’s June report, the US Department of Agriculture suggests the Brazilian drought has not been as severe as previously predicted, and will not impact the harvest significantly. But in the meantime, coffee futures prices have been more volatile than any time in the last 20 years, with dramatic gains and losses so far this year.
“Rarely have we seen a coffee market more influenced by speculation than the current one. The prevailing uncertainty surrounding the damage to the Brazilian crop presently being harvested will last for at least another month, and with it the higher than usual volatility, with all the negative implications for producers and consumers alike,” said the ICO report.
The report suggested that Brazil’s existing inventory has shielded buyers from the price volatility to date: “The drought in Brazil and resulting uncertainty over the crop have been driving prices higher since the beginning of the year, but a well-stocked supply chain has not yet felt the impact, with exports from Brazil exceeding their levels of a year ago.”