WSJ: Brazil’s crop decline will push up coffee prices

A poor harvest in Brazil, the world’s largest coffee producer, could drive up the cost of a cup of coffee. Last year, plantations were hit by drought and then by frost, growers expect only half of the Arabica bean harvest, reported newspaper The Wall Street Journal.

The low harvest, the newspaper notes, could exacerbate the shortage of international supplies and contribute to a new rise in prices. According to Brazilian coffee broker Cazarini Trading Co, Thiago Cazarini, global Arabica prices are likely to rise as estimates for this year’s crop in Brazil begin.

The Minasul coffee cooperative told the WSJ that only half of the promised volumes of coffee could be delivered this year. The company is expected to receive less than a million bags of coffee compared to 2.2 million in 2020.

While global consumption will outstrip production for the second year in a row, stocks of coffee in the warehouses of the Intercontinental Exchange, according to Fitch Solutions, are at their lowest level in the last hundred years, the newspaper writes.

“Coffee futures rose in 2021 and earlier this year, hitting a nearly 10-year high of $2.58 a pound in February,” the newspaper notes. Since then, futures have declined to around $2.23 a pound, but are still higher than in previous years.

Last summer, the cost of Arabica coffee futures during trading on the ICE Intercontinental Exchange rose above $2 per pound (0.45 kg) for the first time since October 2014. This was due to fears of lower output after a sharp drop in temperatures in Brazil’s three largest coffee-growing regions – the states of Paraná, São Paulo and Minas Gerais. On November 30, futures for December delivery hit $2.33 a pound, the highest since November 1, 2011.