Drought in Brazil-Global Coffee Futures prices soar by 53%

Brazil is the largest coffee producer in the world. Coffee in Brazil is mainly grown in the southeast, including Sao Paulo, Minas Gerais and Parana, which are among the hardest hit by drought.

The drought in Brazil triggered a domino effect, and coffee from places such as Tanzania will rise. Adolph Kumburu, secretary general of the Tanzania Coffee Association, said that the price of Tanzanian coffee will closely follow the New York and London markets, and that if the drought in Brazil continues, the price of Tasania coffee will also continue to rise, which will boost the incomes of growers, exporters and the government.

Climatic factors

American food company Volcafe Ltd. The world will face a shortage of coffee in 2014-15 because of the drought in Brazil, he told Bloomberg. British merchandise trader ED&F Man Holdings Ltd. It is expected that there will be a shortfall of 5 million bags in the coffee market, which means that the world will have to face the problem of coffee shortage and rising prices.

Volcafe also said that Brazilian growers would harvest 51 million bags of coffee beans in 2014-15, well below expectations of 60 million bags and below last year's 5720 bags.

In terms of varieties, coffee is mainly divided into two categories: one is Arabica, the other is Robusta. Global Arabica and Robusta are expected to produce 35 million bags and 16 million bags respectively this year, both lower than last year's production.

There are more and more extreme climates such as drought in Brazil, and the threat of coffee cultivation is also increasing.

"if there are more and more extreme weather, the company's supply chain will face more risks," Jim Hanna, head of Starbucks's division, told the Guardian. "

The root of the problem

The drought in Brazil may only be the trigger for the global coffee shortage, the most fundamental reason is that more and more consumers are drinking coffee, that is, the demand for coffee is growing. Consumers in emerging countries such as Brazil, India and China are also increasingly fond of coffee.

Kim Elena Ionescu, development manager of Counter Culture, an American coffee roasting company, told the Washington Post that whether or not there is a drought in Brazil, competition for high-quality coffee will be fiercer and prices will rise. In the past, developing countries produced and developed countries drank, but now consumption in countries that traditionally only produce coffee, such as Brazil, is also beginning to increase.

She also stressed that coffee production is difficult to mechanize and that demand will eventually outstrip supply.