Brazil, world’s largest coffee producing country is forecast to see production in the new 2021-2022 crop, for which harvesting will start in May, to drop by as much as 31% to as little as 43.8 million 60-kilogram bags of both arabica and robusta beans, official and private industry officials said.
If these figures hold this would make it the smallest coffee crop in a decade and comes after the South American giant harvested the biggest crop on record last year, in which total coffee production reached between 63-68 million bags, depending on estimates varying between private trade groups and exporters, the official Brazilian crop forecasting agency, known as Conab, and the U.S. Department of Agriculture (USDA).
“We are witnessing a year with real low production, above all because of the negative biennial pattern affecting the Brazil crop, but also in large part made worse because of the severe drought that affected the southern growing regions during the last half of 2020,” said Fernando Barbosa, a grower himself in Brazil’s key producing region of Southern Minas and a long-time industry advocate working with multiple grower groups across Brazil.
“We had isolated cases of growing regions where temperatures reached 53°C and, in some areas, registered an average of 43°C in the month of October, weather extremes that we have never before witnessed in the history of coffee growing in Brazil,” Barbosa told STIR in an interview.
The extreme heat resulted in severe damage not just to the coffee trees which in the worst cases caused trees to wilt after losing most of their foliage, but also had a “radical impact” on the root system of coffee trees across a significant list of producing regions including many parts of Southern Minas, Mogiana, Sao Paulo, and the Cerrado Mineiro, where the drought hit during October at the peak of the flowering season, said Barbosa.
In an average crop cycle in Brazil flowering starts in late September and continues through mid-November but peaks in October and most coffee farms and regions can expect a good crop based on two solid flowerings between the end of September and end of October. During the 2014-2015 crop cycle, when Brazil’s coffee industry was hit with what at the time was the worst drought in over 70 years, the damage caused during the flowering resulted in a significant percentage of the flowers drying on tress before developing into fruit. Typically, in coffee agronomics this happens when the flowers between 12-14 days after blooming start turning pink, also known as “pinking” and a sign of the flowers having gone too long without moisture in order to be able to develop and instead dry on the trees.
In its first forecast for the new harvest releasedlast January Brazil’s Conab said the crop is forecast to reach between 43.8-49.5 million bags “indicating a reduction between 30.5% and 21.4% compared to the last harvest” but cautioned that it is still too early to determine whether new production will fall into the higher or lower range of that forecast.
“For the arabica crop, which accounts for the main part of the national output, the harvest is estimated to reach between 29.7-32.9 million bags, which represents a drop of between 32.4% and 39.1% respectively compared to the previous harvest,” said Conab, but added that despite the bleak outlook for arabica coffee, the country’s robusta growers are within reach of producing a record harvest. In Brazil robusta coffee is known as conilon.
“As far as Conilon is concerned it is calculated that production will register a record for this species of at least 16.6 million bags, with an increase of 16% over the production in 2020,” said Conab in the January 21 report, specifying that the robusta harvest in seen in a range of 14,135-16,598 million bags. The agency pegged productivity in the new Brazil crop at an average 24.14 bags per hectare, compared to 27.2 bags in the last crop, based on an overall cultivated area of 1.756 million hectares in 2021, down 6.8% from the area in production in 2020 of 1.884 million hectares.
Figures for comparison vary greatly in Brazil, with Conab concluding that the last 2020-2021 harvest ended at 63.078 million bags including 14.311 million bags of robusta and 48.767 million bags arabica beans. These figures compare to USDA which in its last crop report for Brazil released last December said the 2020-2021 harvest was forecast to close at 67.9 million bags and has yet to release its first forecast for the new harvest, but traditionally the trade-influenced USDA issues figures well above those of Conab. Some private trade analysts and exporters have even put the number as high as 70 million bags, but consensus is that a record crop was reached somewhere in the 63-68 million range.
For most of the last 200 years Brazil has been the world’s largest coffee growing and exporting country and today the country’s 290,000 growers continue to provide between 35-40% of the world’s entire supply in any given harvest cycle, industry data show. With the Brazil harvest generally being the key indicator deciding how global coffee prices behave in the international future and options markets, there will never be a single consensus where all parties agree about the outlook for a harvest in Brazil. This year is not proving to be any different and while both private trade as well as official institutions all agree the new harvest will be lower speculation and debate about how much continues to be rampant in the industry.
“Our office is working with a preliminary figure for the new harvest to see a reduction of 25-30% for the arabica crop while the conilon crop is remaining equal as there has been a lot of heavy planting in the past four years,” said Christian Wolthers, of exporters Wolthers & Associates, whose family through three generations since 1949 has been involved in the coffee trade. Based on the Santos-based company’s calculations of the last harvest to reach 68 million bags Wolthers told STIR the new arabica crop is expected to produce between 12.5-15.0 million bags less than last year’s volume of 50.0 million bags and that the robusta crop is pegged unchanged at 18 million bags. If Wolther’s figures hold the crop would reach between 53.0-55.5 million bags in the new cycle, a figure shared with other exporters in Brazil.
Brazilian exporters Grupo Montesanto Tavares, meanwhile, has pegged the new harvest to come in 23% lower, but has the new crop pegged to reach 52.9 million bags based on their 2020 crop figure of 68.21 million bags, Reuters News Agency reported last January. Montesanto said arabica production is set to fall 37% to 31.23 million bags but robusta output, however, is forecast to rise 17% to 21.67 million bags, according to the report.
Despite the speculation as to how much smaller the new Brazil crop will be, an important factor that could prove decisive once the harvest starts is to measure how severe the damage from the drought will turn out to be, said Barbosa, explaining that losses will be even higher in some regions where the drought was a prolonged dry-spell that extended for a full 180 days.
“In the regions that were the most severely affected we are expecting a drop in production of between 48-50% compared to a drop between 33-35% in the regions only affected by the stress from being in the off-cycle,” he said, adding: “Not only are we seeing the effect of the drought during the flowering which has led to very low yields in many farms but we know from experience that due to the prolonged lack of water this will lead to a higher share of black and hollow beans as many cherries were not able to fully develop into beans, especially in the regions where the drought lasted for 180 days.”
At the heart of the new crop dwindle is Minas Gerais state, which in an average cycle accounts for between 50-60% of Brazil’s total national output, and where the reduction could be as high as 42.8% and fall to as low as 19.8 million bags, said Conab.
But not all in the market agree that the negative impact is going to be this severe and even though the harvest is set to become smaller, the actual results will not start to show until the first lots of new crop have been picked and processed and the actual yield can be fully evaluated. Once this happens the new Brazil crop could still show out to be better than expected by many right now, said Marco Ruttimann of Florida-based Coffee Link Brokers Llc.
“Brazil had a humongous crop last year and is by far the best agricultural producer in the world, even by far surpassing the technological competence and expertise of the U.S., and I wouldn’t be surprised to see this harvest reach 55 million bags or even 60 million,” said Ruttimann. As always in the case of Brazil, the jury is still out as for how big or small the final crop will be!