Brazilian coffee sellers are downbeat on the prospects for the supply of beans, in contradiction to market expectations that the country will have a bigger crop next year.
Cooxupé, Brazil’s largest Arabica coffee cooperative, expects next year’s harvest to be as weak as this year’s, President Carlos Augusto Rodrigues de Melo said in an interview, which means another disappointing production for three years in a row.
The cooperative had expected production to increase due to the flowering of the coffee trees at the beginning of the season. However, that was misleading because not all blossoms turn into berries, Melo said.
The latest assessment by Brazilian sellers could frustrate consumers hoping for relief from breakfast inflation, as the country is the world’s leading supplier of coffee. The global coffee market does not appear to be worried yet, with Arabica coffee futures in New York trading at their lowest level in 16 months.
The crop is not going to be spectacular, but probably will be the best in three years.
Judy Gane, Consultant (source: Bloomberg)
While producers in Brazil might be having concerns, market participants still expect a good production because Brazil has seen a good volume of rains.
Fernando Maximiliano, StoneX Analyst (source: Bloomberg)
Brazil’s plight in recent years has been the decline in the coffee harvest caused by previous difficult weather conditions such as drought and frost. Because of this phenomenon, coffee sellers tend to be cautious about a better harvest rather than go along with the market’s positive assessment.
According to Simo Pedro Lima, CEO of Expocaccer, the drought in October was a challenge for Cerrado Mineiro, Brazil’s second-largest coffee-growing region.
Hail also damaged some crops in southern Minas Gerais, Brazil’s largest coffee-growing region. According to the government agency Emater, the storms in early November were stronger than usual and affected 26,600 hectares of coffee-growing land. Although the impact on Brazilian coffee yields is not significant, it only shows that coffee farms are still vulnerable to bad weather.
Photo by Rodrigo Flores on Unsplash
