Mubasher: Arabica coffee prices increased 10% more on Monday, 26 July, reaching their highest in nearly seven years, due to unusual cold weather that threatens coffee crops in the world’s largest producer Brazil.
The prices already jumped by about 20% last week, as severe frosts damaged a large part of fields in the main Brazilian coffee belt, Reuters reported.
In addition, a new polar air mass is forecast to hit the same areas later this week, marking the third strong cold front to hit crops in 2021.
Last week’s frosts had affected 150,000 to 200,000 hectares, accounting for approximately 11% of Brazil’s total Arabica crop area, according to preliminary estimates from the Brazilian government’s food supply agency Conab.
“This marks the first time since 1994 that the country has experienced such a weather event,” coffee trader I & M Smith said in a market update.
“The extent of the damage is still unclear, however estimates are now between 5.5 million and 9 million (60 kg) bags, up from 2 million to 3 million last week,” according to Charles Sargeant, softs and agricultural commodity broker at Britannia Global Markets.
Since the end of June this year, Arabica coffee futures soared by about 35%, with expectations that major coffee brands would raise prices in the coming weeks.