By coffeeclotch - July 21, 2018, 8:43 p.m.
Hi met Mike was wondering what you thought about coffee at these levels.. No Frost in sight but talk of excessive dryness
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Glad you asked coffeeclotch!
As you probably know, the dry season for coffee country in Brazil often continues well into September. For those that are not aware of where the main growing areas are:
This is where they grow coffee in Brazil.....the worlds biggest producer.
The higher the number below, the greater the production. 1=highest.
Looking at the global picture of coffee production below:
Here is a list of historic weather events from frost/freezes and droughts thru 2000.
We had a couple of major droughts after that though.......2014 was the big one.
| Body | Date Posted & Author | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Coffee Frost and Drought History
* In most cases frost or drought was not indicated by the source. Although only F is written in these cases it is likely a combination of the two forces that caused a devastating coffee crop. | May 10, 2018, 11:42 a.m. metmike |
Coffee used to rally in May, dialing in risk premium for a potential frost/freeze but the last severe one(s) were in 1994 because they moved the coffee plantations farther north, closer to the equator after devastating freezes in the previous decades in far Southern Brazil.
Global warming has helped out a bit too.
The coffee crop is harvested at this time of year, so there is harvest pressure as well as frost risk premium(especially in the past-when freezes were more of a threat) coming out of prices which often pressures them lower at this time of year.
I remember coffee trading around 50c for awhile back in the early 90's...........before the massive freeze events in 1994.
Recent prices are down near 10 year lows:
Coffee charts going back 10 years:
The last 7 days:
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Drought in Brazil in 2014 caused a spike
Drought in Brazil and bad weather globally in 2010 caused the 2011 spike
Current price near the 10 year lows.
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It's always dry in coffee country at this time of year and 2 months away from when rains often kick off their rainy season. We have a building El Nino right now. I'll have to see how weak El Nino's effect the weather in Brazil.
Here is the global rainfall compared to average over the last 6 months. Been pretty dry in many locations of South America.
http://www.cpc.ncep.noaa.gov/products/Precip_Monitoring/Figures/global/n.180day.figb.gif
The map below(link provided), gives an animation of global temperatures for the next 10 days. Cold in Argentina and far S.Brazil but the cold does not penetrate deeply enough into Brazil to threaten the coffee crop.
Here is the latest seasonal forecast for precipitation for the upcoming 3 month. Looks a bit dry for coffee to start the rainy season.
Ideally they should start getting some rains by early October to trigger the first set of flowering.
https://iri.columbia.edu/our-expertise/climate/forecasts/seasonal-climate-forecasts/
Coffee up a tad as we hover above the 10 year lows.