Brazil Coffee Bean Production Decline Tightens Global Market Supply Arabica Futures Prices Rise to 4-Year High

According to a recent statement from international coffee trader OLAM, last year's drought across Brazil's coffee belt has cut this year's Brazilian Arabica output — and the world may now be facing the most severe Arabica shortage in 20 years. OLAM projects this year's Arabica crop at 35.5 million bags (60 kg per bag).

And the tightening supply is colliding with rising demand: as countries gradually emerge from COVID-19 and their economies recover, coffee consumption is climbing, leaving the global supply-demand balance extremely fragile. Unease has spread through the supply market.

The chairman of CECAFE noted that Brazil's current coffee inventories are very low — meaning the market has little cushion to absorb a large-scale production shortfall. With supplies this tight, multiple traders expect coffee prices to climb this year on the shortage alone.

Last year the international Arabica futures benchmark traded between 90 and 110 US cents per pound. This year it broke upward to 120 cents, then oscillated between 120 and 140 cents — and has now pressed toward 140 again. OLAM expects shortage-driven tension to keep pushing prices higher and to persist through the 2022/23 season.

According to Reuters, on Thursday, April 28 (US time), the July Arabica futures contract closed at 145.90 US cents per pound — the second-highest closing price since February 2017, when the record close stood at 167.65 US cents per pound.

(Arabica futures price trend, 2015 to present)

Behind the recent rally is exactly that supply anxiety — compounded by a strengthening Brazilian real. On April 28 the currency rose to its highest level in nearly two and a half months, which dulled growers' and traders' appetite to sell and added further upward pressure on Arabica prices.

FrontStreet Coffee Recommendation

With Brazilian green coffee getting more expensive by the season, it's worth knowing which Brazilian beans are worth seeking out. If you simply want a taste of classic Brazil, FrontStreet Brazil Cerrado Red Bourbon is the reference point. Cerrado is one of Brazil's best-known quality regions, and this pulped-natural lot shows cream-roasted peanut, toasted bread, caramel, and hazelnut aromas at a medium roast — round on the palate, non-acidic, with just a whisper of bitterness. It works as pour-over, but is equally at home in a moka pot, as an espresso SOE, in a siphon, or through a French press.

For something more refined, FrontStreet Brazil Fazenda Rainha (Queen Estate) Yellow Bourbon comes from the Mogiana region near South Minas, where fertile red volcanic soils feed exceptionally aromatic cherries. Yellow Bourbon — a mutation of Red Bourbon — gives a cleaner fruit character, and the cup reveals a sugarcane sweetness you won't find in other origins, alongside fruit and chocolate notes. Equally good as pour-over, moka pot, or home espresso.