Coffee experts working for commodity trading firms are crisscrossing Brazil’s Minas Gerais state, inspecting the coffee belt’s 2022 crop prospects as prices approach their highest level in a decade.
Brazil, the world’s largest producer of coffee, has had a difficult year. Prices increased after a drought and subsequent frosts destroyed up to 20% of coffee trees, threatening future production. Crop researchers have thus far produced broad estimates for the 2022 harvest, though traders are still betting on a less productive crop.
Between now and the end of January, when the optimal time for crop assessment is, those walking the fields will discover the truth of that.
“The rains that followed the frosts and drought resulted in an excellent flowering, but the question now is how many of those flowers will develop into cherries,” said Ryan Delany, chief analyst at Coffee Trading Academy LLC in the United States.
Arabica coffee futures on the ICE increased by more than 90% this year as a result of drought, frosts, and then a global container shortage that hampered shipping. Farmers in Brazil, Colombia, and other countries defaulted on pre-sold coffee deliveries as a result of the price surge. continue reading
Throughout the tours, experts attempt to count pinhead cherries on the branches in order to produce more precise projections. Thus far, estimates have been widely disparate.
Judy Ganes, a soft commodities analyst who recently visited Brazil with colleague Shawn Hackett, estimated Brazil’s arabica production at around 36 million bags, one of the market’s lowest projections.
Ganes asserts that drought and frosts harmed the trees’ vegetative health, which others do not fully account for. She anticipates that Brazil’s total crop (including the robusta variety) will total 55 million bags, a far cry from the record-breaking 2020 crop, the previous “on-year” crop in the biennial production cycle, which reached around 70 million bags.
According to Jonas Ferraresso, a Brazilian coffee agronomist, flowering was widespread following October rains, but fruit conversion was below average.
“Many trees developed new leaves in their branches rather than berries, an unusual development that is likely related to the severe drought earlier in the year,” he explained.