BRAZIL— Arabica farmers in Brazil, the world’s top exporter, are seeing bigger-than-expected losses for a coffee crop that already had setbacks due to freakish weather, which could mean higher prices for your morning cup of joe.
Arabica futures have surged about 80% in the past two years, when second-ranked supplier Colombia also saw its crop slashed by too much rainfall. Brazil’s diminished outlook may keep prices elevated for coffee lovers and chains like Starbucks Corp.
Brazil’s drought and cold curbed flowering last season and severe frosts in July 2021 led farmers to cut down coffee trees at a time of high costs for agricultural inputs, notably fertilizer.
That not only slashed last year’s crop but also curbed the potential for 2022, which is supposed to be the higher-yielding cycle of Brazil’s harvest.
“Farmers believe there will be a significant crop failure in the current season,” compared with the last high-yielding cycle two years ago, said Margarete Boteon, an agricultural researcher at the University of Sao Paulo.
Brazil’s national supply company, known as Conab, projected this year’s arabica output at 35.7 million bags in May, which was down from its January estimate of 38.8 million bags.
Brazil’s national supply company, known as Conab, projected this year’s arabica output at 35.7 million bags in May, which was down from its January estimate of 38.8 million bags.
While the estimate signals a recovery from 2021, production will be 27% lower than the previous high-yielding year of 2020. The agency will issue an update on Sept. 20.
If this year’s resulting crop proves even smaller than feared, that could exacerbate an international supply shortfall and help fuel new price gains.
In 2021, Brazil’s poor weather helped push coffee futures to multiyear highs in one of a string of disruptions to global commodity markets.
As the U.S. deals with its highest inflation in decades, the average price for a pound of coffee is US$6.11 in July, whereas a year ago the price was just US$4.56, according to the Bureau of Labor Statistics.
Evidently, as climate change intensifies, new and more resilient coffee varieties need to be developed, including through hybridization with wild coffee varieties in Africa and elsewhere that are themselves in danger from climate change, and need to be protected.
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