Brazil's latest round of dryness cuts hopes for 2022 arabica recovery
12 May 2021by Mike Verdin
The latest round of Brazilian dryness, which has sealed the prospect of a tumble in the country’s coffee output this year, has crushed too hopes of a recovery in 2022, according to leading analyst Judy Ganes.
Ms Ganes, president of J Ganes Consulting, said that Brazil’s dry weather over the past two months – which is also provoking concerns for corn and sugar cane crops – meant that arabica coffee trees were “again under stress”.
“The precipitation totals are even less than last year,” she said in an exclusive white paper for Agrimoney, Market perspectives in coffee - is a perfect storm brewing?.
“Stress is becoming visible on the trees, with leaves curling and turning brown.”
’Even greater concern’
For the 2021 harvest, this is hampering cherries’ prospects of pre-harvest growth, suggesting lighter beans.
“This is usually a time when the arabica cherries have a chance at final filling to gain weight.”
However, “an even greater concern is the impact for the 2022-23 crop”, which will be produced on branches grown this year and in late 2020.
Ms Ganes - one of the few foreign analysts to visit Brazilian plantations in December and February, even during the pandemic shutdowns in many countries – said that she had even then found “stunted” growth suggesting reduced flowering potential.
“it would take absolutely ideal conditions to have a perfect flowering and fruit set and crop development to try to recoup some of this difference.
“That is already out of the question” with the return of dry weather.
The prospects for Brazil’s 2022 harvest are particularly important for production potential in that it will be an “on” year in the country’s cycle of alternate higher and lower harvest years.
Many roasters are relying on next year’s harvest to rebuild inventories which are expected to be run down this season – and indeed commentators such as Fitch Solutions and Rabobank have cited the prospect of a larger 2022 crop as cause for expecting arabica prices to weaken later in 2021.
Fitch Solutions on Monday forecast that coffee “prices will ease from September” in part on anticipation of Brazil’s on-year crop, as well as pressure from harvests in Central America, Colombia and, for robusta beans, Vietnam.
However, Goldman Sachs offered an alternative scenario, seeing New York arabica futures at 195 cents a pound in 12 months’ time, nearly 40 cents above the futures curve.
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