Sunday 29 May 2022

Crop failure in Brazil and logistical problems may drive prices in 2022

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SAO PAULO, Brazil – In spite of more favorable weather conditions in late 2021, the coffee sector in Brazil still expects a significant crop failure in 2022/23, scenario that may keep prices firm in 2022. Players surveyed by Cepea are uncertain about the intensity of this possible reduction in production; however, estimates are likely to be more accurate after the first months of this year, the filling period for coffee cherries.

Despite the positive biennial cycle for arabica crops in 2022/23, the dry weather in most part of the development period and frosts in the winter of 2021 affected plants, leading to flower abortion in some cases in many regions surveyed by Cepea.

Therefore, even with the perspective of a good robusta production in 2022/23, the total harvested in Brazil may be low considering a positive biennial cycle, which is likely to hamper the recovery of national and global inventories – they reduced after the sharp production decrease in 2021/22, which totaled 47.7 million 60-kilo bags, according to Conab (-24.4% compared to 2020/21).

Moreover, logistical issues verified in 2021 may continue to be verified in most part of 2022, which can limit Brazilian shipments in the 2021/22 season. In other origins, such as Colombia and Vietnam, besides logistical bottlenecks, players are also concerned with La Niña effects on crops.

In Vietnam, heavy rains delayed the harvesting in 2021 and grains hit the market only in December.

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