Rain resumes in Brazil! Coffee bean production rises and prices fall

According to media reports, coffee producing areas in Brazil are about to return to effective rainfall, which is expected to ease the recent drought and be conducive to the growth of coffee trees in the new growing season, especially in November, when Arabica coffee producing areas begin a new flowering season.

Since April this year, Brazil has reported hot and dry weather, and the situation is very serious. The average temperature in many areas where coffee and other agricultural products are mainly grown is high, and the rainfall has been lower than the historical average. Some areas even have no rain for nearly six months. In addition, dryness and falling water levels and water shortages in many of Brazil's major rivers due to drought not only led to a decrease in coffee production in 2024 and 25, but also undermined the cultivation and production potential of coffee in the new season in 2025.

According to the Brazilian meteorological department, the rainfall in the coffee-growing area of the state last week was only 25.1 mm, 74% of the historical average, but the cumulative rainfall for the whole of October was higher than that of the previous two years, but still below the historical average.

According to meteorologist Climatempo, heavy rain is expected in early November in Minas Gerais, Brazil's largest Arabica coffee producing region. If rainfall remains stable in the next few weeks, coffee blossoms will be better restored. However, according to local experts in Brazil, continuous rainfall may slow the losses, but not enough to make up for the losses caused by previous severe droughts and high temperatures.

However, although rainfall is now restored in several parts of Brazil, rainfall in the Amazon is still insufficient, which, coupled with the combined effects of rising temperatures and climate change, has further exacerbated the impact on ecosystems, food security and transport infrastructure, while water levels in important waterways such as the Amazon, Rio Negro and Madeira River rivers remain at historic lows.

According to Wilson Sons, Brazil's largest integrated port and shipping logistics service provider, the impact of drought on domestic shipping is particularly pronounced, especially on river transport, which hinders inland transport of food and fertilizers, and leads to the time and cost of the goods supply chain, which may lead to higher local prices.

For Brazil's coffee industry, it is likely to face rising prices and planting costs. Apart from the impact of drought on logistics and transportation, the biggest impact is the recent collapse in the exchange rate of the Brazilian currency, the real.

Recently, the dollar has strengthened significantly in the Brazilian market due to fiscal uncertainty and the upcoming US presidential election. The Brazilian real has fallen 2.86 per cent this week, and the real has fallen to its lowest level against the dollar in nearly three months. Although the devaluation of the real makes Brazilian coffee more price competitive in the international market, it also means higher prices of imported materials such as fertilizers and pesticides, which increases the cost of planting.

In addition, as the delay rate of many ports in Brazil remains high, the current situation of export logistics has not improved due to the impact of strikes and other aspects, increasing export costs. According to previous reports, these conditions have cost exporters 5.938 million reais. Coupled with the delay of the EU EUDR policy, the EU demand for coffee slows in the short term, and the reduction of imports also makes the international coffee price fall, so the future coffee production and price are full of uncertainty.

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