Instant Coffee Prices Risk Rising With Brazil’s Dryness Hurting Crops

Brazil’s coffee industry is facing a potential crisis due to dry weather, which could damage the cheapest coffee bean variety, robusta, and make instant coffee less affordable. The lack of rain and above-average temperatures are expected to cause the world’s largest coffee producer to harvest less robusta beans than expected. El Niño weather impacts will also reduce output from a key producing region of beans used in instant coffee. Production is expected to be 15% to 20% lower than initial estimates, potentially resulting in the smallest crop since at least 2020, with output below 20 million bags. The drought in northern Espirito Santo has led to concerns for the crop’s harvest in May, especially given high temperatures. Local authorities have declared a state of alert, limiting water consumption and allowing only nightly irrigation. The impacts of dry Brazilian weather have already increased volatility in coffee markets, with Robusta futures surged 42% this year. Top exporter Vietnam also faces negative impacts from El Niño this year.

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