THE GLOBAL WINDOW OF TURKISH FOOD AND AGRICULTURE The Global Window of Turkish Food and Agriculture Sector
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August 30, 2024
First came wildfires that scorched sugar cane fields. Now, the worst drought in more than four decades is threatening coffee and soybean crops in Brazil.
From May through August, some key agriculture areas faced the driest weather since 1981, according to natural disaster monitoring center Cemaden. And there is no relief in sight: there’s no rain in the forecast for at least two more weeks, a period when coffee trees usually flower and farmers start planting soy.
The lack of rainfall poses risks for global crop supplies in a world that’s become increasingly dependent on Brazil for everything from sugar to coffee and soybeans. Losses could amplify financial stress for Brazilian farmers already contending with a steep decline in prices.
“This is one of the worst droughts in the history of coffee,” said Regis Ricco, a director at RR Consultoria Rural, which provides agronomic services to several producers in the largest-growing areas of Brazil.
The long-lasting drought in areas that produce arabica coffee, the type favored by Starbucks Corp., likely will damage buds before trees can flower ahead of the next crop, according to Ricco. There hasn’t been any significant rain in arabica regions since March, he said.
Flowering is such a critical moment for coffee because they develop into the cherries that contain the beans. Arabica futures have already surged more than 30% this year, and crop losses in Brazil could add fuel to the rally.
“If there are issues with flowering, than there will be losses no matter what happens with the weather later on,” said StoneX analyst Fernando Maximiliano.
Wildfires that hit cane fields last week have already spurred London-based commodities trader Czarnikow Group Ltd. to revise down its forecast for Brazil’s sugar production for the current season. That’s a setback for a nation initially expected to gather a giant harvest.
As the weather remains dry and temperatures high, the top sugar cane-growing state of Sao Paulo is on alert for more wildfires this weekend.
Regular showers that are typical of Brazil’s spring likely will be delayed to late October, said Rural Clima meteorologist Marco Antonio dos Santos.
Below-average rains expected for September and October could also drive farmers in Mato Grosso to postpone soybean sowing until better humidity, according to AgRural analyst Daniele Siqueira. Growers that choose to sow crops while soils are still dry may need replant.
Delays to soybeans could also push back other crops that usually go into the ground later in the year such as cotton and corn.
By Dayanne Sousa and Clarice Couto,
Source: Bloomberg
