SAO PAULO/NEW YORK: Brazilian coffee farmers and analysts are expecting losses to the country's 2021 crop due to an extended dry spell hitting most of the producing areas in the world's largest producer and exporter.
Social media chat groups frequented by coffee farmers in Brazil have been flooded in recent days with pictures and videos of crops in bad shape, showing parched branches and dry leaves.
The weather in Minas Gerais, Brazil's top coffee-producing state, has been drier than usual, according to Refinitiv Eikon data. Total precipitation for the last two months in the southern part of Minas Gerais was just 23 millimeters (0.91 inch) compared to the historical average of 68 millimeters (2.68 inches) for the period.
Procafe, the main coffee research institute in Minas Gerais, said in a study last week that some farms had a moisture deficit of around 100 millimeters (3.94 inches) compared to historical levels.
"That is near the maximum stress coffee trees can endure," said Jose Braz Matiello, a coffee expert at Procafe, noting that younger trees will lose yield potential.
Fields are starting to flower now, a key stage to determine the size of the next crop. "If trees are not healthy, they will convert less flowers in fruits, reducing production potential," said Fernando Barbosa, a coffee farmer in Minas Gerais.
Market players, however, believe coffee fields will regain strength once rains arrive between late September and early October, replenishing soil moisture and providing the conditions for a good flowering.
"Weather is not a concern this early in the season," said a New York-based hedging advisor, adding that it would start to become a problem if it does not rain until October.
Coffee prices hit an eight-month high last week, with speculators sharply increasing their long positions, in part due to the weather in Brazil.
Brazil has basically finished harvesting a record crop estimated at 68 million 60-kg bags in a Reuters poll.
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