El Niño and the Next Harvest: Ocafi on the Situation in Brazil

Coffee production in Brazil relies heavily on consistent rainfall. There are two crucial periods. From September to December, steady rain is needed to flush the trees evenly and support flowering and pollination. Then, from December to April, high moisture levels aid the development and maturation of the cherries, before precipitation tapers off into the drier autumn months and harvesting kicks off in May.

El Niño conditions raise the risk of erratic, unevenly distributed rain after flowering, which can lead to aborted flowers. So far, this has mainly been observed in the northern coffee-growing regions. Notably, Ocafi’s farms are located primarily in the south and appear to be less affected.

So what does this mean for prices? The market always trades on expectations for the next harvest, and analysts already estimate that El Niño could cut next year’s output by 1 million bags or more. Whether that fear materializes, only time will tell. For context: we have come from around $4/lb to roughly $3/lb today. In May and June, prices even dipped to around $2.40, but that move reversed quickly. Significant rainfall during the June and July harvest left more coffee on the ground, slowed both picking and drying, and raised concerns about lower quality.

This shows how sensitive the market has become to even minor shifts in the weather. Global supply chains depend on the fresh crop arriving on time. A delay of just a few weeks – whether from a slower harvest or a shortage of containers due to the ongoing conflict involving Iran – means coffee reaches the major consuming countries later, which drives up prices in the short term. At the same time, coffee-growing areas worldwide have expanded over the past two years, stimulated by high prices. Most analysts therefore expect the market to settle in the mid-$2 range over the medium term. Whether that plays out depends largely on the weather, and El Niño remains one of the biggest factors to watch.