Speculators were already on alert when the Brazilian drought ravaged coffee crops in the first three months of 2014. Now, farmers fear that a delayed October rain will cause them to lose even more. Coffea arabica trees require moisture in order to bloom; their flowers produce the cherries that are harvested for their seeds (coffee beans).
Without rain, the flowers will fall off the trees before they have a chance to flower. This is bad news for Brazil, which grows one-third of the world’s coffee, and 50 percent of its arabica.
This uncertainty has doubled the price of arabica coffee, and one commodities strategist told the Wall Street Journal that coffee-trading prices will likely rise from $2 to $3 per pound in 2015.
“Now, trading is all about the weather,” Fain Shaffer, the president of Infinity Trading Corp. in Indianapolis, told Bloomberg. “Since the chances of rain have been pushed back another week, we are seeing more premium being built into prices.”
Brazil’s National Coffee Council estimates that farmers could collect less than 40 million bags in 2015, an 18 percent decline from the year before.
Brazilian scientists believe the current drought in São Paulo (the worst in 84 years) has its origins in deforestation. Though Brazil curbed its deforestation between 2004 and 2013, forest clearing rose by 10 percent in the past year. The Amazon, according to climate scientist Antonio Nobre, functions as a “gigantic hydrological pump,” and without its trees, the forest forms less vapor, which leads to less rainfall in the region.