Dry weather continues in Brazil! Drought warnings issued in some coffee-producing areas

At present, it is the harvest season for Brazilian coffee, and Brazil has harvested 58 per cent of this year's coffee production, far higher than the 54 per cent average over the past five years, according to data released by consultancy Safras& Mercado.

The acceleration of harvest progress is all due to the fact that the current drier weather conditions are conducive to harvest, but at the same time, high temperature and drought weather may adversely affect coffee production.

From the current actual harvest, coffee production is not ideal, lower than market expectations, and the coffee bean shape is too small. This has also led some local organizations in Brazil to cut their coffee production for the new season. For example, the Marex Group has cut its forecast for Brazilian Arabica coffee production by 2.6 million bags to 44 million bags (60 kg / bag).

In addition, the local coffee agency said that the actual production is expected to be 10-15% less than expected, and it has been reported that the actual production of some coffee farms in the northern state of Esp í rito Santo is less than 30% of market expectations. Due to the small size of coffee beans, it is necessary to use more coffee beans to fill a bag of 60kg.

But recently, in some coffee producing areas in Brazil, the water shortage is more serious. For example, in Alta Mogiana, a sub-region of Sao Paulo state, there has been no rain for more than 100 days, while in Minas Gerais state, the rainfall last week was 1.3mm, only 24% of the historical average, and there had been no rain for three consecutive weeks.

Although a cold snap was reported earlier, the temperature dropped only slightly after the cold snap came, and the temperature remained the same as before after the cold snap ended, and this cold spell did not bring rain.

According to Cooxupe, Brazil's largest coffee cooperative, little rainfall has been recorded since May, water levels in some rivers have fallen, and soil water shortages in some areas need to be paid attention to, all because almost all coffee producing areas have recorded water shortages of more than 20 millimeters less than the historical level in the same period.

At present, the worst is the Hilado producing area in Milashiras, where the water shortage is as high as 44mm and triggered a drought warning signal. In addition to the lack of rainfall, the average temperature in the coffee-growing areas is also 2 ℃ higher than the historical level, and according to the weather forecast, only a small amount of Rain Water is present in Parana, and the weather in the coffee-growing areas will remain dry and dry in the coming weeks.

However, due to the drought, the current production is not as expected, and the price of coffee in Brazil and internationally continues to rise. According to local reports in Brazil, the average spot price of Robusta in Brazil in June was 1214.21 reais per bag (about US $224), the highest level since records began in 2001, and up 20.6% from the average price in May. The average spot price of Arabica coffee is 1349.21 reais per bag (about $249), up 15% from the May average.

Internationally, the futures price of Robusta coffee has risen to 4000 US dollars per ton due to drought in Vietnam. Now, with the news of reduced production in Brazil, the price has soared to 4627 US dollars per ton. As for Arabica coffee futures, in addition to Brazil, the drought weather also affected American countries, especially North America, which reduced Arabica production in the Americas, and the futures price rose to 317.8 cents / pound.

However, the current market concern about the coming La Nina phenomenon is all due to the fact that Brazil has been affected by La Nina phenomenon and suffered severe drought and frost in the past few years, resulting in a more than 20% reduction in Brazilian coffee production. This time the upcoming La Nina phenomenon may reduce coffee production in 2025x26.