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Frosts In Brazil Expected to Cut by 5 Million 60-kg Bags Coffee Output: Colombia’s FNC

By: Diana Delgado, Contractor

Frosts In Brazil Expected to Cut by 5 Million 60-kg Bags Coffee Output: Colombia’s FNC

Coffee Network ((Bogota)-Frosts registered in south of Brazil will prompt a reduction of coffee output by 5 million 60-kg bags in the coffee year 2020-2021 with the world’s largest coffee-producing nation reducing its supply by at least 20 million bags in the current crop year, the general manager of the Colombian coffee growers federation said.

Roberto Velez Vallejo, general manager of the Colombian coffee growers federation, said the reduction of Brazilian coffee output confirms a global deficit of beans for the current crop year “but we don’t know how much (the deficit) is going to last,” he said.

 Temperatures below zero degrees celsius were registed Sao Paulo, Minas Gerais and Mato Grosso do Sul Minas Gerais raising concerns over the damage on crops in the region, with lows of -4.4OC recorded in Maria de Fe, with reports of severe frost in Sao Paulo and Minas Gerais The September contract soared yesterday by 6.5% at the time of writing to trade at 166.6 c/lb after testing a high of 168.45 c/lb, marginally below the previous high made on 1st June. The frosts comes amid a crop already under stress due to the drought conditions present throughout coffee growing region that produces Arabica, said Velez Vallejo.

Skyrocketing coffee prices and the sharp depreciation of the Colombian peso sent the benchmark local coffee price to the highest level ever, although coffee growers are getting a fortune equivalent to as much as COP1.7 million pesos ($440)  for two bags of 125kg of parchment coffee. It is relevant to note that until eight months ago, local prices were flat to production costs of COP850,000, Meanwhile, coffee growers had to endure many years of low coffee prices that did not allowed them to pocket gains.

The coffee growers federation set the benchmark price for two loads of parchment coffee at COP1.645 million pesos yesterday.

The coffee growers federation sets every day a benchmark price to buy beans but that is a reference price as growers usually get a premium for their beans, while others secure premiums based on their certifications. In addition, middlemen also known as “pergamineros” pay a higher price to secure the beans in a very competitive market that has a growing number of international buyers trying to secure Colombian beans.

Prior to the frosts Brazil was already projecting a much lower output than in the previous year.

Recently,  the Brazil's food supply and statistics agency Conab, said Brazilian coffee output in the 2021-2022 coffee year has been revised lower to 48.8 million bags of 60-kg, a decrease of 22.6% over the preceding year, but those estimates do not take into consideration the latest effects on the frosts.

Arabica coffee production is estimated at 33.4 million 60-kg bags, a decrease of 31.5% compared to the volume produced in the last harvest. Conilon, for its part, should reach 15.4 million bags, an increase of 7.9% in relation to the previous coffee year.

By Diana Delgado

 

 

 

  • Coffee

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