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Brazil’s coffee harvest is in full swing. Analysts predict a record crop, with estimates ranging from 66 million 60kg bags to more than 75 million bags. The scale of Brazil’s coffee sector—the country is the world’s largest coffee producer—means its harvests have an outsized impact on global coffee prices. The coffee futures market has been falling in recent months in anticipation of a bumper crop.
However, as Ana Mano, Ilena Peng and Mumbi Gitau report for Bloomberg, farmers are in no rush to sell their harvests. The commodity price has fallen around 40% from the highs of the previous two years, and farmers who earned good money during that time are willing to wait for it to rise again. Simão Pedro de Lima, CEO of the cooperative Expocacer, said producers are “not feeling pressured” to sell. “The winds are blowing in favor of farmers,” he said.
Usually, Brazilian farmers presell a percentage of future production to pay for the costs of growing and harvesting their coffee. This year, instead of 30–40% of that production being presold, the figures are closer to 15–20%, according to analysts. Farmers in major coffee-producing countries like Vietnam and Indonesia are also holding off from selling, in hopes that the market might rise again.
The market has already reacted. In response to lower supplies, as well as unexpected rain in Brazil at a key moment for the harvest, the commodity price rose nearly 3% over the past week. Despite the record-breaking yield estimates, farmers and agronomists are now concerned that the recent rain could impact both the size and quality of Brazil’s coffee harvest.
Read more on Brazil’s coffee harvest here or via the Daily Herald here.
Photo by Diego Catto on Unsplash
