Last week’s severe frosts caused extensive damage to fields in Brazil, the world’s largest coffee producer.
Arabica coffee prices rose a further 10 percent on Monday, after rising nearly 20 percent last week, to their highest level in nearly seven years, as unusually cold weather threatens coffee crops in the greater world producer, Brazil.
Last week’s severe frosts damaged a large part of the fields in Brazil’s main coffee belt and a new polar air mass is forecast to move over the same areas later this week, the third strong cold front to hit crops this year.
Coffee trees are extremely sensitive to frost, which can cause serious damage and even kill trees completely. If a farm needs to replant trees, it would take the new trees about three years to become productive.
Preliminary estimates from the Brazilian government’s food supply agency Conab said last week’s frosts had affected 150,000 to 200,000 hectares (370,658 to 494,210 acres) about 11 percent of the total arabica growing area of the country. country.
“This is the first time since 1994 that the country has experienced such a weather event,” coffee trader I&M Smith said in a market update, referring to the harsh frosts on July 20.
Arabica coffee futures prices on ICE rose sharply on Monday, and the September contract rose to a high of $ 2.1520 a pound (about $ 4.73 a kg), the highest in the first month since October. 2014.
“The extent of the damage is not yet clear, however estimates are now between 5.5 million and 9 million (60 kg or 132 pounds) of bags, up from 2 million to 3 million last week,” he said. Charles Sargeant, agricultural and soft commodities broker. at Britannia Global Markets.
Sargeant was referring to Brazil’s 2022 crop, as this year’s smaller production has been primarily harvested. A good production year in 2022 for Brazil was considered important to balance world supply.
Arabica coffee futures have risen roughly 35 percent since the end of June, raising the possibility that major brands will have to hike prices in the coming weeks.
Starbucks, Nestlé and JAB Holdings, which are among the world’s largest coffee processors and retailers, declined requests for comment on potential impacts on the industry and the prospect of reduced availability next season.
Smaller players would certainly suffer, while consumers will have to pay more.
“We have stocks only until September. We have already raised prices three times this year, following market movements, but the situation is still difficult, ”said Luciane Carneiro Mendes, a partner at Cafe Carneiro, a small roaster in Brazil.
Coffee prices in Brazil, he said, have risen from 400 reais ($ 77.30) per 60 kg bag in December to about 800 reais ($ 154) this month, but there are estimates of further increases to about 1,000 reais (192 , $ 59).