- Extreme frost in Brazil’s coffee-growing region is set to harm next year’s crop, sending prices of coffee to a six-year high.
- Futures for arabica beans jumped to $2.08 a pound Tuesday, the highest level in New York since 2014, per the Wall Street Journal.
- It’s the second major weather shock to hit Brazil’s coffee farms: before the frost, Brazil suffered through a drought.
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Extreme frost in Brazil’s coffee-growing region is set to harm next year’s crop, sending prices of coffee to a six-year high.
Futures for arabica beans jumped to $2.08 a pound Tuesday, the highest level in New York since 2014, according to the Wall Street Journal.
Exacerbating the price surge is the fact that the frost is the second major weather shock to hit farms in Brazil, the world’s largest coffee producer. This spring, the region’s rainy season hardly saw any rain during one of its worst droughts in almost a century. The drought hurt the 2021 crop and dropped the coffee supply output in Brazil as plants withered.
Now, traders are spooked that the frost will harm the 2022 coffee harvest, and have pushed coffee futures up 30% in July.
José Marcos Magalhães, president of the Minasul coffee cooperative and also a grower, told the Journal that he expects to lose two-thirds of the 2022 harvest on his farm.
“I normally produce 12,000 bags, and now I think I’ll lose about 8,000,” José Marcos Magalhães said.
The frost is the latest weather shock to spoke commodity traders into bidding up prices. Last week, lumber futures spiked as concerns grew that wildfires in Canada and the Western US will harm supply chain routes.