Brazil’s Coffee Stockpiles Dwindle Amid Record Prices and Drought

Brazil’s coffee stockpiles are diminishing, driven by farmers selling off their crops early to take advantage of record-high prices amidst a devastating drought. As of now, most co-ops have sold a significant majority of their coffee, leading to fears of a supply gap until the next harvest. Projections suggest further decrease in production due to ongoing climate challenges.

Brazil is currently experiencing a significant decrease in its coffee stockpiles, originally intended to last until July, as farmers rapidly sell their beans in response to record-high prices. Facing one of the worst droughts in 2024, coffee farmers have seized the opportunity to capitalize on soaring global prices, which have nearly doubled within the past 14 months. Reports indicate that arabica prices surged 70 percent last year, while robusta gains reached 72 percent.

The upward trend continues, with arabica reaching an all-time high of over $4.30 per pound on February 11, and robusta peaking at $5,847 per metric ton the following day. Consultancy Safras & Mercado revealed that farmers have sold 88 percent of the 2024 crop as of last Monday, surpassing the same period last year and the five-year average.

Willian Cesar Freiria, sales manager at Cocapec, noted the unprecedented low stock levels for February, stating, “We never had such low stocks in February, a period that is still distant from the new crop.” He emphasized that coffee availability will remain scarce until the next harvest starts later in May or June. Luiz Fernando dos Reis, from Cooxupe, echoed this sentiment, indicating that farmers in the largest coffee co-op in the world have sold 90 percent of their crop.

While most farmers have sold most of their harvest, some, like Paulo Armelin in the Cerrado Mineiro region, are holding onto portions as a precaution. He has retained 40 percent of his harvest, negotiating prices significantly above last year’s levels, reflecting increased market value. Additionally, coffee futures sales are lagging behind historical averages.

The Brazilian government’s crop forecasting agency Conab has projected a 4.4-percent decrease in the production of the 2025 to 2026 coffee crop, predicting a three-year low of 51.81 million bags, primarily due to critical low rainfall conditions affecting crop yield.

In summary, Brazil’s coffee stockpiles are rapidly depleting as farmers respond to record-high prices following a severe drought. The significant sales of the 2024 crop indicate a worrying trend of low availability leading up to the new harvest season. Projections suggest a further decrease in production, raising concerns over the coffee supply in the coming years.

Original Source: macaonews.org