Western media: The price of coffee beans caused by the cold wave in Brazil has soared

According to the Spanish newspaper "Izvestia" website reported on July 31, since the beginning of this year, as the economy has gradually recovered from the new crown crisis, commodity prices have risen at a samba-like rate in the case of bottlenecks in the production process. In the case of industrial raw materials and minerals, the price "rebound" was particularly significant, with steel prices rising 87.9%, iron ore rising 37%, and copper prices rising more than 26%. The same is true for crude oil, with Brent up 44.5 percent. In the case of agricultural products, a similar situation has emerged, with the sharp rise in the price of coffee beans being particularly striking.

The main reasons for the soaring price of coffee beans are the expectation of the end of the epidemic crisis and the polar cold wave hit by Brazil, the world's major coffee bean producer and exporter.

The cold wave caused the worst frost in 30 years in Brazil's major coffee-producing regions. Coffee beans have been rising in price since January this year. As of this week, the price of coffee beans in the London commodity futures market has risen by 35.5%. As the market believed that the damage to the coffee crop from the cold wave might not be as severe as initially thought, the price of coffee beans in the London market fell by 5% on July 30. The price of coffee beans in the Chicago futures market fell even more, reaching 8%, the biggest one-day decline since 2010.

The problem is that frost doesn't affect the crops that are currently being harvested, but it affects the next year's harvest, creating uncertainty. Brazil and Vietnam are the world's largest producers of coffee beans, and production activities in these two countries have a direct impact on the price of coffee beans.

According to the report, the annual export value of coffee beans exceeds $20 billion. In terms of coffee bean exports, Brazil just set a new record in 2020/2021, selling 45.6 million bags abroad, up 13.3% from the previous year. During the coronavirus pandemic, the South American country received the largest coffee bean harvest in history for two consecutive years. According to the Brazilian Association of Coffee Exporters, the country's coffee exporters achieved revenue of $5.842 billion between July 2020 and June 2021, an increase of 13.4% year-on-year, the best in five years.

But expectations are very different now. The USDA's latest calculations show that Brazil's coffee bean harvest will fall by almost 20% in 2021/2022.

Among the two main varieties of coffee beans available, Arabica coffee beans account for 70% of world production, and Robusta coffee beans account for 30% of world production. Among them, Arabica coffee beans are considered to be more fragrant and of better quality, and their market prices are higher. Arabica beans account for more than 66% of Brazil's coffee bean production. This week, Brazil's Ministry of Agriculture acknowledged that 8 to 11 percent of the country's Arabica coffee crop could be damaged by the recent frost.

Source: Reference News Network