Brazil: Arabica coffee harvest falls by 42 percent

Bremerhaven / DE. (eb) For investors, trade in green coffee is becoming more attractive because demand is increasingly outstripping supply. The worst drought in more than 100 years has hit coffee producers in Brazil hard, reports the Foreign Agricultural Service at the United States Department of Agriculture (USDA FAS) in its June 2021 review. The question now is whether and how prices will skyrocket due to the lack of supply. Add to that the known restrictions on plantations in the wake of the Covid 19 pandemic and further shutdowns in the wake of the delta strain of the Corona virus spreading worldwide.

According to USDA FAS, world coffee production for the 2021/2022 crop year is expected to decline by 11 million bags year-over-year to a total of 164.8 million. Accordingly, in crop year 2020/2021, the volume estimate was 175.8 million bags of 60 kilograms each. Expressed as a percentage, the green coffee harvest will therefore fall by 9.37 percent (164.8 : 1.758 = 9.37).

The shifts in world coffee production will mean that in 2021/2022 there will be sufficient Robusta varieties available. The supply of Arabica beans, on the other hand, will decrease significantly. Leaving aside the problems caused by Covid-19 in Brazil, a combined effect for the 2021/2022 crop is as follows:

Arabica trees in Brazil enter the production cycle every two years, and 2021 is accordingly not the best crop year in this cycle. In addition, there is a prolonged drought in Brazil (caused by climate change), which according to USDA-FAS data is one of the worst in this century. Overall, this is causing Brazil’s arabica coffee crop to drop 42 percent from last season – while Vietnam’s robusta coffee crop is up 5.8 percent and Ethiopia’s production is expected to increase 2.0 percent in 2021.

At the same time, USDA FAS reports that global coffee consumption in the European Union, the United States and Brazil increased by 1.1 percent in 2020.

All indications are that coffee will become more expensive. But that doesn’t mean the price of coffee at retail will have to reach unimaginable heights. It will simply be «higher.» But it will not be as high as it might have been a good ten years ago. Vietnam as a coffee producer has a different weight today than it did ten years ago. India is also now one of the exporters worth mentioning, as well as Ethiopia. The loser this season is clearly Brazil, and it remains to be seen whether the country will be able to regain lost market share in the future.

Download: Coffee: World Markets and Trade – June 2021 – United States Department of Agriculture Foreign Agricultural Service – inclusive tables as follows:

202106-USDA-FAS-COFFEE
.