Brazil’s intense drought, which is currently hobbling this year’s coffee harvest, now threatens to curb next year’s crop as well. Some farmers have seen their trees flower prematurely and others fear that the ongoing stress could hinder their trees’ ability to fully recover before the onset of the rainy season brings flowering in September.
Brazil, the world’s top coffee producer, has been bracing for weak production after the monthslong drought, which the government has declared an emergency. Gro’s Drought Index and precipitation monitor are showing worrying signals for major coffee-growing areas. In Minas Gerais, the No. 1 producing region, persistently low soil moisture levels can be seen in the chart at top right of this Gro Growing Conditions app display.
The USDA estimates 2021 production of Arabica coffee, the principal variety, will be down 30% from last year at 47.8 million bags (2.87 million tonnes). Contributing to the decline: Brazil is currently in the off year of its biennial cycle, which typically brings an 11% decline in production, based on Gro’s analysis of the past seven biennial production cycles.
Futures prices are signaling a tightening of Arabica supply. Since November Arabica ICE coffee futures prices have climbed 45% to $1.64/lb, their highest level in four and a half years.
Brazil also grows robusta coffee, a hardier variety, and 2021 production is expected to increase 5% to 21.2 million bags (1.27 million tonnes). To stabilize the market, skilled roasters will likely substitute robusta coffee, which is typically used for instant coffee, for lower-quality Arabica in their blends.
Join us on June 17 and June 22 for a live presentation with Gro analysts to learn how Gro's Growing Conditions app, which is part of the Gro Explorer app, can help you form the most detailed picture of growing conditions and mitigate weather-related risk.
This insight was powered by the Gro platform, which enables better and faster decisions about factors affecting the entire global agricultural ecosystem. Gro organizes over 40,000 datasets from sources around the world into a unified ontology, which allows users to derive valuable insights such as this one. You can explore the data available on Gro with a free account, or please get in touch if you would like to learn more about a specific crop, region, or business issue.