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Improvement in weather conditions in Brazil is expected to improve the coffee haarvest situation.
Brazil harvested nearly 40 per cent less arabica coffee than last year and the least amount since 2009 according to a crop forecast. This loss, according to Bloomberg, is equivalent to about two thirds of US consumption. A survey via a European coffee roaster found 37 per cent of coffee consumers have been drinking more coffee per week since the start of the Covid-19 pandemic, and 73 per cent of coffee drinkers report they have been making coffee at home more often since it began. A drop in coffee production could lead to a shortage. “There’s no line of trucks waiting to load coffee at the warehouses,” Regis Ricco, a Director at Minas Gerais-based RR Consultoria Rural, told Bloomberg.“Farmers send a truck with coffee to the warehouses, and a few hours later the truck is back, when normally it would take as long as a day. It is alarming.” The Center for Advanced Studies on Applied Economics (CEPEA) surveys found that, until 6 August, harvesting activities had only reached 70 to 80 per cent of expected output. Due to the dry weather, and the lower volume of coffee to be harvested, the harvest progressed favourably from July onwards. CEPEA stated that harvesting this year was late compared to previous years due to later crop flowering in 2020, which consequently delayed the crop’s development. As a high volume of crops has already been harvested, CEPEA said that Brazilian coffee farmers have confirmed a crop failure for the 2021/22 season. “Agents have reported harvests lower than the expected in some areas, besides lowergrade beans,” says Cepea. “On the other hand, this season has been marked by beans of higher quality beverage, favoured by the dry weather during the harvesting.” On 13 August, the CEPEA/ESALQ index for Arabica coffee type six, which had been delivered to São Paulo city, closed at $196.25 USD per 60-kilogram bag, up 1.4 per cent from 30 July. This price, according to CEPEA, is due to increased concerns about Brazil’s drought. The International Coffee Organization (ICO) has been tracking this market’s recovery and also projected expected shortages in Brazil. It estimated 33 million 60kg bags is under two-thirds of the previous year’s level. Not only is 2021/22 an off-year in Brazil’s biennial Arabica crop cycle, but the prolonged drought in Brazil – now reported to be the worst dry spell in the country in nearly a century – will drastically reduce the size of the harvest. Prices could be pushed higher if buyers’ fears about widespread defaults from Brazilian farmers, as reported by Reuters, come to pass.
