Low temperatures in Brazil and the price of coffee.

I have heard for several months in conversations with farmers or importers that the Brazilian harvest will be smaller this season.

This was due to less rainfall on m2. So it's been known for a while that the prices of coffee from the next harvest would be higher. For the past few days, as you have noticed, social media has been flooded with information about frosts in Brazil! ?
Yes, yes, in this sunny Brazil where you can fry on the Copacabana come temperatures that drop below zero at night, already many coffee-growing regions have been affected by low temperatures, and this weekend frosts are expected to affect the largest coffee belt in the world! Farmers have protected the smaller trees and seedlings with film something along the lines of our greenhouses. They protected the regular coffee trees with potassium sulphate by spraying.
Will this help? Let's hope so!

In that case, what about such a tree when it encounters such low temperatures? It depends...

It depends on how low the temperature has fallen and for how long. In the worst case the tree will have to be cut down, ? in a slightly better situation it will not have to be cut down, but it too will be heavily dependent on the amount of rainfall and the temperature in the second half of August. All this comes with the highest coffee price in about 10-15 years!
And this price will continue to rise until at least the end of August, maybe even mid-September. Farmers will then, be able to estimate the losses from the current harvest, and estimate the losses for the next harvest, or in the case of a worse situation for the next 2-3 harvests.
At the moment, the loss is estimated at 5-8 million bags of coffee! That is about 8-13% of how much was produced in Brazil last year.
Will this affect the price? Ofkors! Is it already here and now! Oh yes already here and now?! A little bit yes, a little bit no... Yes, the people who work on the stock exchange (who are also able to turn up the speculation on such occasions?) exporters, importers and roasters feel it all the time. It is worth pointing out here that when the market changes, coffee that is on the slope in the warehouse also gets more expensive or cheaper.
Not for the average consumer, because the large roasters often contract their coffee for a year ahead, so the price is assured, or they will pay the difference on futures contracts,
But this will still affect them to a lesser extent. At least now at this point, because if the scenario worsens they will still have to pay a lot more for coffee at some point, simple law of supply and demand. It will all depend on the final harvest and the estimation of future yields based on the trees cut.

Well ok, but how does this relate to coffee Specialty? Will the price increase?

Yes it will increase, if low quality commercial coffee increases it is natural that the price of high quality coffee will also increase, but not in proportion to the price of commercial coffees. Coffee 88+ will not be affected, because there the price mainly depends on the quality of the cup profile and the quantity of the coffee in question.
The price of coffee has been rising since the beginning of 2021, as by COVID-19 part of the containers travelled empty, increasing the cost of transport from the country of origin to, for example, the largest coffee port in the world located in Hamburg. These increases were not so noticeable because the coffee market was doing well anyway. Now, admittedly there is still a long way to go to the record of 1977 where the price was 332 cents per pound of coffee, as last week the highest price was 201 cents per pound of coffee (Price increase relative to May about 45%). Let's hope we don't come close to the record, let alone break it. Too low a price is not profitable as some farmers may move into more profitable production such as sugar cane, as happened some time ago in some African countries. A higher price may offer opportunities for development Specialty Coffee where the difference between commercial coffee and high-quality coffee will be smaller. Conversely, too high a price could lead to a stagnant market as coffee becomes too luxurious again for certain sections of society.

Robert Rybczynski

Co-founder Story Coffee Roasters, Co-owner Story Coffee Roasters.
Vice Polish Coffee Roasting Champion 2018.

A daily drinker and roaster, he has been involved with coffee since 2008.
I was drawn in for good in 2014 when I had my first espresso from Ethiopia Amaro Gayo.