Brazil sees frosts hitting up to 11% of arabica coffee area

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Unusually strong frosts reported over Brazil’s agricultural regions last week hit up to 200,000 hectares (495,000 acres) of arabica coffee farms, or 11% of the total arabica coffee area in the world’s largest coffee producer.

According to preliminary estimates from the government’s food supply agency Conab released over the weekend, an area of 150,000 to 200,000 hectares would see damage to trees, ranging from light to severe.

Coffee trees are very sensitive to damage from cold, which is why Brazilian coffee production has moved over the decades from cooler Southern states to central Minas Gerais, where more than 70% of Brazil’s arabica coffee trees are located currently.

But freak frosts reported on July 20, when temperatures dropped to freezing levels in minutes when it was already early morning, hit a large area in Minas Gerais, the first such weather event in that part of the country since 1994.

“Conab continues to monitor the situation. This data is preliminary and subject to change,” said the agency in a statement.

Brazil accounts for roughly 40% of the global coffee trade. The prospect of reduced production in 2022 as a result of the frosts sent coffee futures ski-rocketing and raised fears of defaults.

Vanusia Nogueira, a director at Brazil’s specialty coffee group BSCA and the country’s candidate for chair of the International Coffee Organization (ICO), said most people agree on the view of a 10% cut from initial expectations of a 2022 crop around 67 or 68 million bags.

She said Brazilian coffee co-ops have decided to work together, using their available stocks, to avoid non-performances on existing contracts with large commodities traders.

Nogueira said Brazil’s government will likely extend financing lines for farmers to restore crops once evaluations about the damage are completed.

Brazilian coffee brokerage Escritorio Carvalhaes said in a weekend report that initial hopes for a 2022 crop near the 2020 record of about 70 million bags are gone.

“In our view, Brazil’s arabica production losses next year will be significant”, the broker said, adding that ICE futures have yet to properly reflect the situation despite the price increases last week.

Cold weather is forecast to return to Brazil in coming days, with potential for new frosts.

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