Coffee Crops Face New Setback as Prices Hit 7-Year Highs

Heavy rains in Colombia just ahead of the coffee harvest are the latest setback that threatens to limit supplies from the top three coffee producing countries and has pushed coffee prices to their highest levels in seven years. 

The supply problems—in Brazil, Vietnam, and Colombia—come even as global coffee demand is at a record high, thanks in part to soaring consumption in China where a host of foreign and domestic retail coffee outlets have set up shop. 

With both coffee demand and commodity coffee prices rising, it is increasingly likely that roasters will raise retail coffee prices, too. Arabica coffee futures prices have jumped 66% in the past year. 

Record high precipitation levels threaten the quality of Colombia’s new coffee crop. Excessive rainfall just before and during a coffee harvest can lead to “Rio defect,” which leaves a strong, off-flavour taste. 

Next year’s Colombia crop also could be hurt by the expected return of La Niña. The US Climate Prediction Center currently forecasts a 70%-80% chance that the global weather event will return in late 2021 for a second year in a row, potentially bringing additional heavy rains that can hinder coffee flowering and cause cherries to rot, eroding yield. 

In Brazil, the No. 1 producer, ongoing drought and unexpected frost in July have damaged the crop. CONAB, Brazil's National Supply Company, this week cut Arabica coffee production estimates for 2021 to 36% below last year’s crop. That far exceeds a typical 11% decline in production in “off years” of Brazil’s biennial coffee cycle, based on Gro’s analysis of the past seven biennial production cycles. 

Brazil’s current drought, the most severe since 2003, also could damage next year’s crop if dry conditions persist through September and October—just before and during the key flowering season. Growing conditions, weighted to show just Brazil’s coffee regions, can be viewed with daily updates on Gro’s Navigator for Agriculture app.  

For Brazil, a return of La Niña later this year could bring additional hot and dry weather during the country’s peak growing season.  

Global coffee supplies also have been disrupted in recent weeks by shipping disruptions out of Vietnam’s main port, Ho Chi Minh, due to a surge in COVID cases. Vietnam is the world’s second-largest coffee producer and exporter, specializing in robusta beans. ICO robusta composite prices are up 67% from a recent low in April.  

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.