Posted on Jan 4, 2021, 11:25 a.m.
It has been folded since October. In Brazil, in the south of the state of Minas Gerais, the main coffee-producing region, the rains did not come on time. “I am very concerned”, says Guilherme Salgado, commercial director of Minasul, a cooperative of 8,500 coffee growers who produce 2 million bags per year.
“We have just had a very good year, both in terms of quantity and quality. But subsequently, rainfall fell by 42% between April and October compared to the previous year ”, he explains. The drought has prompted more than a quarter of coffee growers to prune their old coffee plants, using the method known as ‘zero harvest’. In practice, these plants will have a chance to produce more next year. However, they will not produce anything this year, explains Guilherme Salgado. Only “young” coffee trees, planted more recently (or irrigated) could withstand the drought.
” Never seen “
In this hilly region, which produces more than half of Brazil’s coffee and 70% of its arabica, most producers expect to suffer big losses. In Brazil as a whole, production could even drop between 30% and 35%, estimates the leader of Minasul, who also chairs the Brazilian Association of Gourmet Coffee (BSCA). Ecom Trading and Volcafe, two large coffee traders, projected similar falls.
Experts who made their reconnaissance visits to the region were surprised at the sight of “starving plants “. Judy Ganes, president of J. Ganes Consulting, told the Bloomberg agency, from its 30 years of experience in the sector, that it had“ never seen anything like it ”.
30% of the world market
The markets also reacted in anticipation of major disruptions. “Some contracts may not be able to be honored », Warned Cesar de Castro Alves, consultant of the investment bank Itaú BBA, in a report intended for his clients. As the Latin American giant is the world’s number one coffee maker, with a 30% market share, it predicts that the global coffee harvest will grow from a surplus of nearly 10 million bags (of 60 kg) to 2020/21 to a deficit varying from 1.7 to 6.5 million bags in 2021/22 depending on the fall recorded in Brazil. According to Guilherme Salgado, of the BSCA, the impact of the fall in supply will be even greater than the pandemic effect, which continues to weigh on demand.
The outlook for the next harvest contrasts with the performance recorded in 2020. Brazil thus reported a production “ historic ”of 63 million bags, up 28% from the previous season. With a strong surge of 42% for arabica. Robusta shows a slight decrease (5%).
Exports, favored by the very strong depreciation of the Brazilian real, climbed 15% over the first 11 months of the year, compared to the same period in 2019. In November, three quarters of the current harvest was already marketed , specifies the Brazilian Ministry of Agriculture. The market is likely to get even more tense over the coming year.