A poor harvest in the world’s largest coffee producer threatens to push the cost of a cup of joe even higher, The Wall Street Journal reported.
Farmers in Brazil are dealing with the fallout from freakish weather last year, where plantations endured first drought and then frost. Some say that their crop of higher-end arabica coffee beans will be less than half what it could be in a good year.
Some of that bad news is already priced in for investors, coffee companies and drinkers. Brazil’s poor weather helped push coffee futures to multiyear highs in 2021, in one of a string of disruptions to global commodity markets. But if this year’s resulting crop proves even smaller than feared, that could exacerbate an international supply shortfall and help fuel new price gains.
Brazil matters to the global coffee market because it is by far the world’s biggest exporter. The upset is worse because its arabica coffee production runs in a two-year cycle, yielding a bigger crop in even-numbered years. Meanwhile, bad weather has also hurt the coffee industry in neighboring Colombia, another major producer.
