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Coffee — Higher Prices Are Brewing Due to La Niña

16 October 2020

Prices of coffee may get a boost from La Niña as the weather event threatens crops in Brazil and Colombia.

 

After a bumper 2020 harvest, La Niña has heightened the risk of a decline in Brazilian output next year as below-average rain and high temperatures so far this year make their mark. While the critical flowering stage is going well, La Niña is important for the long-term growing season over the next several months where total rainfall is important.

 

Brazil grows 40% of the world’s coffee, more than twice as much as the No. 2 producer, Vietnam. The Gro Drought Index shows that the top coffee producing regions of Minas Gerais, Espirito Santo, São Paulo, and Parana are all experiencing drought. The drought in 36% of the districts in those regions is moderate, severe in 20%, and exceptional in 22%. Minas Gerais, which accounts for 70% of Brazil’s Arabica coffee output, is experiencing drought in all but 3% of its districts.

 

In Colombia, the No. 3 producing country, La Niña tends to bring adverse above-average rains. Heavy rains can cause cherries to fall or rot, and increased cloud cover reduces the luminosity necessary for flowering to occur, eroding yield potential. 

 

Current models do not forecast that this La Niña event will be as strong as that of 2010-2012, which was Colombia's wettest period in recent history. 

 

Click here to view Colombia Coffee Production

 

Gro’s platform includes coffee data from various sources, including USDA PS&D, FAO, and ICO. Gro has also added in-season crop projections from Brazilian statistics agency IBGE to complement our historical crop data. IBGE releases crop forecasts at the state level for the current growing season each month starting in January. Final figures for area, yield, and production are reported at the district level, although there can be a one- to two-year lag before the agency finalizes these figures.  

 

 

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.

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