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BRAZILS SLOW HARVEST AND MIXED MESSAGES ON PRICE

This time last year, farmers in Brazil had harvested 40% of the coffee fields. So far this year, they are about 10% behind and have reportedly harvested about 35% of the crop. The five-year average for this period is even higher at 44%, according to a Reuters article. The slow progress comes despite good weather in the main growing regions and is partly attributed to difficulties in obtaining labour and uneven ripening of the fruit, which complicates the process.

However, while the government estimates that the 2022 harvest will yield 53.4 million bags, other analysts have predicted a much higher production of about 61.1 million bags.

Interestingly, higher production should increase supply and put downward pressure on prices. Nevertheless, many farmers are holding back on selling their stocks in the expectation that prices will rise. It was not immediately clear why some farmers believe this, although it could simply be fear of missing out on a potential windfall.

Currently, spot prices are moving upwards due to the slow harvest, which is curbing supply for the export market, but this will come to an end and farmers may consider hedging by selling some stock now and holding back some to wait and see if they can get a better price.

Photo source: Knase, CC BY 3.0 DE https://creativecommons.org/licenses/by/3.0/de/deed.en, via Wikimedia Commons

Author

  • Nick Baskett

    organisation:

    Nick Baskett is the editor in Chief at Bartalks. He holds a diploma from the Financial Times as a Non Executive Director and works as a consultant across multiple industries. Nick has owned multiple businesses, including an award-winning restaurant and coffee shop in North Macedonia.

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