Brazil coffee fears 'for real' - and a threat to 2015 too

So how much of the 18% jump in coffee prices in a week is down to justifiable production concerns, and how much to hype? The worries about the damage to Brazil's coffee crop from dry and hot weather are "for real", expert Carlos Brando says. Sure, the co-operatives which have been sounding the alarm over poor production prospects may always "have an interest in making the crop look smaller", to promote prices. "But the worries are for real. Their concerns are genuine," said Mr Brando, director at Brazil-based P&A International Marketing, and a consultant on the bean for the likes of the International Coffee Organization and the World Bank. The fears are being supported by P&A's network of agents, who sell coffee machinery, "throughout production areas. There is the same story from everyone", Mr Brando tells Agrimoney.com. Driest since 1943 The first problem is the lack of rainfall, highlighted by Sao Paulo city receiving its driest January since 1943, but with the main coffee-producing state of Minas Gerais next door receiving only a fraction of normal precipitation too. "In areas that would typically receive 100-200mm of rain, most municipalities have received 60mm or less." Data from consultancy Somar show southern Minas Gerais receiving 40-50% of average rains over December and January, although the north of the state has fared better. 'Hottest summer' Meanwhile, temperatures have been unusually warm too, a reflection of the lack of cloud evident in the dry spell. "It has been the hottest summer in Brazil in my life," said Mr Brando, speaking from the border of Sao Paulo state and Minas Gerais, "We are still getting 35-37 degrees Celsius, temperatures you get on the beach but not up here," at about 1000m. "Normally it would get to 30, 31, 32 degrees, and then you would get clouds and rain which would cool everything down." Cherries vs beans The impact on coffee has been to retard the growth of seeds within cherries. "Two months later, the conditions would have had a much smaller effect. But this has happened at seed formation time." This means that when cherries are hulled, a higher rate contain small beans, or prove hollow. "Usually from 100 kilogrammes of cherries, you will get about 55 kilos of seed," Mr Brando says. "Now you might find you are looking at 50 kilos, 45 kilos or lower. You might be looking at the same yield of cherries, but that the seeds are not fully formed." There is an impact on quality too, with a greater proportion of smaller beans meaning, for example that a "smaller percentage" of the crop is deemed suitable for making expresso coffee where customers are shown the beans before grinding. Next year too? As for the impact on the headline crop volume, while Mr Brando does not produce harvest forecasts, Minas Gerais might lost the equivalent of about 2.5m bags. "If you were expecting 52m bags before," from the Brazilian harvest, the world's biggest, "you might be coming down to 49.5m-50m bags," he said. However, whatever the impact on this year's production, it is important to remember that next season's crop is threatened too, with the dryness stunting growth of the branches which will carry the flowers, and cherries, for the 2015 harvest. "Next year is as much as an issue as this year," Mr Brando said. "The branches are not growing, and the leaves are not growing on the branches. "This is what I think people in the market are beginning to appreciate."