Cold climate raises coffee prices

The expectation of frost in the South and Southeast regions of Brazil – coffee-producing regions – caused coffee prices to rise on the New York Stock Exchange.

Although at least half of the 2019/2020 crops completed harvesting in the country, a possible frost can cause impacts in the next harvest, since the cold reduces the production of branches that have had leaf burning.

Because of the risk of frost, second-place contracts for arabica coffee rose 3.84% this week. Yesterday, prices hit the highest since November, at US$1.1365 per pound.

It was not only the possibility of frost that contributed to the increase in the price of coffee. The lower supply of quality grains in the current Brazilian crop and the projections of supply and demand also affected. In a report released on Tuesday (07/02), the International Coffee Organization (ICO) reduced the estimated surplus in world coffee production by 8.8% to 3.11m bags in 2018/19 – the international harvest closes in September.

Coffee Growers Seek Alternatives

Despite the recent rise in prices, according to coffee growers, the sector faces its worst moments, with prices only covering production costs.

To find alternatives to this crisis, the city of Campinas (SP) will host the 2nd World Forum of Coffee Producers on July 10 and 11. The first edition took place in 2017 in Medellín, Colombia.

Organizers of the global conference say the primary goal this year is to look for ways to improve the economic sustainability of producers.

“In Medellín, the goal was to find a way to mobilize producers, to have a coordinated forum to discuss our issues,” said Vanusia Nogueira, one of the organizers. “Prices have only fallen from there, so now we need to discuss alternatives to improve farmers’ incomes,” she added.

Other topics to be discussed are how coffee growers sell their crops and the use of technology and new applications to facilitate and accelerate sales. Another highlight is the establishment of a minimum value of grain sales similar to what the leading cocoa producers in Africa are trying to negotiate with processors.

The following graph uses Dataliner data to show the monthly trend in coffee exports between Jan 2006 and May 2019:

Sources: Valor and Reuters

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