The Financial Times reported on July 23 that the severe frost in Brazil’s coffee production zone this week triggered market concerns about the decline in production, resulting in coffee prices on the international market approaching the highest in seven years. With the sharp drop in temperature in Brazil’s three largest coffee planting areas-Paraná, São Paulo and Minas Gerais, the price of Arabica coffee beans per pound on the New York futures market rose to more than US$2, a record The highest since October 2014. The price increase this week alone exceeded 30%, and the cumulative price increase this year has reached 60%.
Brazil is the world’s largest coffee producer and exporter. Traders said that the frost damage in Brazil’s coffee-producing areas far exceeded expectations. Since the beginning of this year, the coffee trees in the production area have experienced a once-in-century drought. Drought and frost damage will have a great negative impact on coffee production next year. If the tree damage is severe, farmers will be forced to carry out extensive pruning, resulting in a sharp decline in production next year.