Withering coffee beans may mean pricier return to your favourite café
Coffee traders are just starting to come to grips with the extent of Brazil’s weather woes as prospects for next year’s harvest shrivel in the hot and dry conditions.
The smooth- tasting arabica beans that Brazil ships to buyers including Starbucks Corp. saw little reprieve in November, with rainfall missing estimates and prices paid to local farmers approaching record levels, according to the nation’s top growing co- operative Cooxupe.
“Rains have been awful, well below the average,” Cooxupe commercial director Lucio Dias said in an interview, adding the impact may extend into the 2022 season. “The situation is very concerning.”
While Brazilian output was already expected to fall after this year’s record and as arabica trees enter the lower- yielding half of a biennial cycle, the dryness may exacerbate declines ahead of a possible recovery in consumption, sending the market into deficit. A supply squeeze in the world’s top producer may start to bite late next year.
“We see upside for coffee prices,” said Carlos Alberto Fernandes Santana at Empresa Interagricola SA. “The Brazilian crop decline hasn’t been fully priced in yet.”
Cooxupe’s meteorological stations show drier- thannormal conditions since May. Areas in Alfenas, a municipality in the nation’s coffee belt, had rain above 2 millimetres ( 0.08 inch) in only 12 per cent of the 210 days throughsunday.
In November, the region got 95 per cent of forecast precipitation, although most came right at the end of the month, with temperatures averaging 1 C above normal and maximums topping 36 C. That’s after a dry October when rain was 60 per cent of normal. The co- operative may release its first crop estimate by end-january.
In December, forecaster Somar sees normal rainfall but temperatures that are as much as 2 C above average. The main growing areas could get as much as 100 mm this week but that would help restore only 10 percentage points of the moisture deficit in some parts.
“Except for rare episodes of good rain, we’ve had only tiny precipitations of 2 to 4 millimetres and blazing sun,” said Mauricio Araujo Ribeiro, 48, who farms 128 hectares of arabica in southern Minas Gerais. “The forecaster predicts rains, the sky gets cloudy, but the rain doesn’t come.”
Losses on his farms are expected at 30 per cent to 35 per cent, although if the weather doesn’t improve, it could be 50 per cent, he said.
Even in irrigated areas, losses are coming in bigger than first thought, said Regis Ricco at RR Consultoria Rural in Alfenas, Minas Gerais. “It’s chaos — a year to forget,” he said.
The bleaker outlook for Brazil comes after recent hurricanes in Central America that threaten the region’s production, while downpours delay robusta- coffee harvest in Vietnam. Supply concerns propelled New York futures to their biggest monthly gain since July.