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Brazil’s Next Coffee Crop Seen Sharply Lower as Prices Soar
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Brazil’s next coffee harvest is expected to come in sharply lower after trees suffered damage from punishing weather early this season. The weak crop outlook has kept global coffee prices hovering around 10-year highs. 

Brazil’s intense drought followed by unexpected frosts in June and July killed many young trees and left mature trees struggling to recover. Some producers are bracing for production of Arabica beans, the most popular variety, to decline by as much as 20% to 30% in 2022/23 from 49 million bags (3 million tonnes) produced two years earlier, the previous “on year” of Brazil’s biennial coffee cycle. 

Brazil’s coffee growers will be watching in the next few weeks as pinheads and berries emerge on the trees, as this will provide a clearer indication of potential yields. Harvest typically begins in April.  

The fate of Brazil’s next coffee harvest is greatly important to coffee roasters and consumers worldwide. Brazil, the biggest Arabica producer and exporter, had one of its weakest harvests in years in the “off year” ended in September, with production estimated to be down 30% year over year. 

Prices for Arabica coffee, the most popular variety, are at their highest level in a decade. Widening spreads between Arabica and robusta coffee prices could prompt roasters to mix greater quantities of robusta in their traditional blends. 

Gro’s Climate Risk Navigator application, weighted for just coffee growing areas, shows Brazil had moderate to severe drought readings on the Gro Drought Index from May through November, before drought levels eased. For more information about Gro’s Climate Risk Navigator for Agriculture, contact support@gro-intelligence.com

Strong October rains in Brazil’s key coffee growing regions helped replenish soil moisture depleted by months of drought, which the government had declared an emergency. A downside: The rains created ideal conditions for weeds that compete with coffee trees for moisture and other soil nutrients, hurting coffee yields if not controlled.

Benchmark coffee prices have been hovering near 10-year highs, reflecting market players’ fears that Brazil’s difficult growing conditions will cap its crop’s potential and renewed COVID emergencies could unleash more global supply chain chaos. While robusta coffee prices also have risen sharply, the price spread between Arabica and the cheaper robusta has widened, which could encourage some roasters to add more robusta beans to their traditional blends.

Coffee production elsewhere is looking more positive. Colombia, the No. 2 Arabica producer, is expected to increase production by 3% in the most recent marketing year, as the country improves control of coffee rust. And production in Vietnam, the largest robusta producer, rebounded after a dry year and is expected to be up 7%. 

-Related Insights: 

La Niña Is Back—What That Means for North and South American Crops

New Brazil Coffee Crop Could Get Boost From Timely Rainfall

Brazil Drought Damage to Coffee Seen Lasting to Next Year’s Crop


 

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