Brazilian Coffee Beans Production Sharply Declines! Coffee Bean Prices Expected to Rise Again in 2023

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Brazil Coffee Production Decline Due to La Niña Phenomenon

Recently, according to CCTV News reports, coffee production in Brazil, the world's largest coffee-producing country, has significantly decreased. Currently, it is a critical period for crop growth in the Southern Hemisphere, but the La Niña phenomenon lingering over the Pacific has persisted for three years.

Market expectations suggest that not only coffee but also Brazil's main crops such as beans and corn will likely see reduced yields this year.

The La Niña phenomenon refers to the continuous abnormal cooling of sea surface temperatures in the eastern and central equatorial Pacific. La Niña affects temperature and precipitation patterns, exacerbating droughts and floods in different regions. The current La Niña in Brazil began around September 2019 and has mostly remained in a mild to moderate state since then, but gradually intensified starting in April this year.

Brazilian agricultural meteorologist Dos Santos stated: "Whenever La Niña occurs, the entire country of Brazil is affected, with reduced rainfall in the south and flooding in the north. During the 2021-2022 summer and autumn harvest seasons, the central-southern region of Brazil experienced severe drought, while the north suffered from devastating rainstorms."

Impact on Caconde: Brazil's Largest Coffee-Producing Region

According to reports, Caconde City, located in São Paulo state in southern Brazil, is the largest local coffee-producing area, with 85% of the region's total annual income coming from coffee bean sales. In good harvest years, the annual coffee bean production in this area approaches 14,000 tons. However, after being affected by La Niña for more than three consecutive years, local market participants expect that by the May 2023 harvest season, the total coffee bean production in the area may drop significantly to no more than 10,000 tons.

Ademar Pereira, President of the Caconde Rural Union in Brazil, stated that three years ago, the producing area could yield 50 bags of coffee beans per hectare, but now it can only produce 15 bags per hectare. The region has experienced weather conditions such as hail, frost, water shortages, and high temperatures. Consecutive years of bad weather have led to a significant reduction in coffee bean production, making weather issues the most common concern for Brazilian coffee growers.

Currently, it is a critical time when coffee trees are forming coffee fruits and require large amounts of water. However, the La Niña phenomenon has led to lower precipitation in Brazil compared to the same period in previous years, which will severely affect both the production and quality of Brazil's coffee beans next year.

Global Market Impact of Reduced Brazilian Coffee Production

Data shows that Brazil is a renowned coffee-producing region and the world's largest coffee producer and exporter, accounting for one-third of the world's total production. It holds an extremely important position in the entire coffee trading market. Reduced production in Brazil will lead to a tight overall market supply, significant increases in global coffee bean prices, and coffee futures maintaining a high level. Domestic coffee traders are stockpiling spot goods to ensure domestic market demand.

Impact on Other Coffee-Producing Regions

Not only Brazil has been affected by adverse weather conditions. Uganda, Africa's largest coffee-exporting country, saw its coffee bean exports drop to approximately 503,000 bags last month, a 14% decrease compared to the same period last year, according to Xinhua News Agency reports. The Uganda Coffee Development Authority stated that due to drought, coffee bean production has declined in most regions of Uganda, and the coffee harvesting season in central and eastern Uganda has shortened, which is the main reason for the decline in coffee bean exports.

Global Coffee Production and Consumption Outlook

According to International Coffee Organization data, global coffee production for the 2021-2022 coffee year was 167.2 million bags (60kg per bag), a 2.1% decrease from the previous year's 170.83 million bags, while global coffee consumption increased by 3.3% to 170.3 million bags. Just as global coffee consumption is recovering from the pandemic-induced market downturn, concerns arise about the supply from Brazil and Africa, coinciding with reduced reserves and poor harvest prospects in the largest coffee-producing countries.

Image source: Internet

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