Brazil welcomes rain! Coffee production in the new season has eased

According to Brazilian media reports, high temperatures have occurred frequently in Brazil since the beginning of 2024, and the fire is very serious, which has affected many industries. According to the Brazilian ecosystem Map Monitoring Network (MapBiomas) recently released Brazil's national forest fire monitoring report, between January and September 2024, 22.38 million hectares of forest fields in Brazil were destroyed by fires.

The area of forest fields burned in September alone reached 10.65 million hectares, almost the same as in the previous eight months and 150 per cent higher than the 8.98 million hectares in the same period in 2023. Among them, the native vegetation of Brazil affected by the fire accounted for 73% of the burned area, and the proportion of farmland affected by the fire accounted for 20.5%.

According to relevant statistics, during the nine-month period this year, the vegetation areas of Cerrado in Brazil and the Amazon (Amazonas) vegetation cities in Amazon State were the worst hit by the fire this year. Among them, a total of 11.3 million hectares of primary vegetation in the Amazon vegetation area were burned. 8.4 million hectares of land in the Hirado vegetation area were destroyed by fires, which became more frequent and serious during the peak drought in September, with 4.3 million hectares destroyed in September alone. Due to extreme drought, the fire spread rapidly and even affected nearby towns. Earlier, the Brazilian National Federation of Agriculture and Animal Husbandry (CNA) estimated that the fire caused Brazilian agribusinesses to lose at least 14.7 billion reais from June to August.

At present, these conditions have led to higher electricity prices and losses in agricultural production in Brazil, and some Brazilian experts have pointed out that as climate change intensifies, high temperature-related diseases may increase, and outdoor work becomes more difficult. reduced production efficiency and led to more destructive disasters, resulting in casualties and property losses. On the other hand, the aggravation of drought will increase the vulnerability of the ecosystem, reduce the area of available arable land, reduce the production of agricultural products, and reduce industrial productivity, and the impact will be more obvious in the coming months or even years.

In addition these losses have led to higher costs of agricultural production such as the refurbishment of plantations and a reduction in the supply of agricultural products on the market. Electricity prices in Brazil have risen by 5.36% in a month, pushing up the cost of living as a result of insufficient rainfall at Brazil's hydropower stations since September.

However, there is good news that after a long period of hot and dry weather, Brazil will usher in rain in the next few days. But according to Brazil's National Meteorological Institute, rain is likely to fall in most parts of southern Brazil, including the states of Grand Southern, Santa Catarina, Sao Paulo, Goas and Minas.

Although such a large amount of rainfall can effectively alleviate the recent dry weather and help the current fire situation, the rain will not last long and will continue to weaken in the future. In addition, rainfall has reduced the temperature of some porridge in the south and southeast, but the climate in the central part has not changed much, and the climate in Sao Paulo remains around 26 °C.

Despite recent high temperatures and droughts in Brazil, coffee exports remain strong, with Brazil exporting 4.464 million bags (60 kg / bag) in September, an increase of 33.3% over the same period last year, according to the Brazilian Association of exporters (Cecafe). However, there are still logistics implications in terms of exports, with coffee reportedly piling up at the port due to the accumulation of a large number of vessels and containers at the port, which has led to the non-shipment of about 2 million bags of coffee this year, increasing losses for exporting companies.

For these reasons, coffee prices are high in Brazil as well as internationally. In particular, the price of Robusta in Brazil has been higher than that of Arabica in September as production cuts are still reported in the new production season in Vietnam. At present, the spot price of Arabica in Brazil is about 1472.73 reais per bag, and the spot price of Robusta coffee is 1497.46 reais per bag, which is 24.73 reais higher than that of Arabica.

At present, for Brazil's coffee industry, the problems of drought and high temperature continue to affect coffee production in the new production season. Although there is rain, the short-term rainfall has little effect on alleviating the drought, and the high temperature weather still affects the coffee production areas. As a result, coffee production in the new season will not improve much, although the US dollar index rose sharply earlier due to US inflation, driving down commodity prices. The price rate of Brazilian coffee has fallen, but it remains high due to the increase in cost.

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