Gloomy forecasts for Brazils harvest pushed prices up last week, briefly hitting a 6 1\/2 year before softening after news that the frost that causes severe damage last week, would ease this week.<\/p>\n\n\n\n
Robusta prices hit a three and a half year high, while Arabica futures were at their highest for over 6 years, at one point on Friday, as concerns over future supply from Brazil started to bite.<\/p>\n\n\n\n
It was only back on July 5th that the International Coffee Organization (ICO) raised its 2020 \/ 2021 coffee surplus estimate by +12%, to 2.26 million bags, from its previous estimate of 2.02 million bags.<\/p>\n\n\n\n
Then CeCafe last week, noted that Brazil June exports were slightly higher at +0.4% Year on Year, to 2.73 million bags.<\/p>\n\n\n\n
However, the impact of recent weather conditions in Brazil is hard to overestimate. the widespread frost had a severe effect, not just on the current harvest, but damage to the trees will impact the 2022 crops, which is particularly significant because Arabica is a biennial crop, and 2022 is an upswing year when farmers expect to see a greater yield.<\/p>\n\n\n\n
In addition to the frost, however, some parts of Brazil including the important coffee growing area of Minas Gerais are experiencing the worst drought they’ve had in almost 100 years<\/p>\n\n\n\n
The lack of precipitation is so dire that hydroelectric dams are having to operate at a fraction of their capacity leading to fears of power cuts. As one coffee farmer put it:<\/p>\n\n\n\n