What Is Pressuring the Brazilian Coffee Industry Now?

Brazil's coffee industry is absorbing two blows at once. Cecafe reported that in June the port delay rate reached 62 percent: of 413 container ships assigned to coffee exports, 254 faced delays or voyage changes. About 1.23 million bags missed their scheduled dates, costing roughly 1.588 billion reais, about US$290 million, in foreign exchange earnings.

The Port of Santos hit a record 82 percent delay rate, while Rio de Janeiro and Itaguai stood at 51 percent. Prolonged heat and drought in Minas Gerais are shrinking coffee beans size, with production expected to be revised down by 2 to 3 million bags. A dengue outbreak has added labor shortages, deepening the export squeeze.

The Brazilian coffee industry is currently facing severe challenges. According to the latest report from the Brazilian Coffee Exporters Council, the delay rate at major ports reached 62% in June, causing 1.23 million bags of coffee to miss their scheduled export dates and resulting in foreign exchange losses of approximately US$290 million. The delay rate at the Port of Santos climbed to a historic high of 82%. Meanwhile, prolonged high temperatures and drought are affecting core producing regions such as Minas Gerais, and harvested coffee beans are showing smaller bean sizes, with production expected to be revised down by 2 to 3 million bags. In addition, the dengue fever outbreak has exacerbated labor shortages, further weighing on exports. Front Street Coffee continues to monitor developments in Brazilian producing regions and brings you the latest industry analysis.

The port export report released by Cecafe, the Brazilian Coffee Exporters Council, on July 19 shows that in June, a total of 413 container ships were tasked with coffee exports, but 254 of them encountered delays or voyage changes at major ports, a ratio as high as 62%.

A survey of 30 exporting companies conducted by Cecafe shows that in June alone, due to factors such as ship delays, deadline adjustments, insufficient terminal space, and labor shortages, 1.23 million bags of coffee (60 kg per bag) in Brazil failed to be shipped for export.

The export disruption of these 1.23 million bags of coffee led to a reduction in foreign exchange earnings of approximately 1.588 billion reais (about US$290 million), while also causing losses of about 4.7 million reais for these 30 companies. On the port side, the delay rate at Brazil's largest port, the Port of Santos, set a record, reaching 82%; the delay rates at the ports of Rio de Janeiro and Itaguaí in June were 51%.

The Port of Vitória is another port with severe logistics bottlenecks, facing multiple problems such as ship queues, container shortages, difficulties in gate control, and insufficient loading and unloading space and manpower, resulting in damaged goods, transshipment to other ports, and rising coffee transportation costs. According to statistics, 374,000 bags of coffee failed to be shipped from the Port of Vitória in June, accounting for 30% of Brazil's total unshipped coffee that month, reducing Brazil's foreign exchange earnings by about 480 million reais (about US$89.5 million).

In addition to export difficulties, weather factors are also hitting Brazil's coffee industry. A report released by Brazil's meteorological agency on July 19 pointed out that high temperatures are intensifying in parts of the central-west and northeast, and maximum temperatures will be very high. In the coming period, a large amount of dry, hot air will affect most of the country, mainly the central-west, southeast, north, and northeast, with many cities expected to see temperatures above 35°C.

States in the northeast are expected to face the most severe heat, with maximum temperatures in many cities reaching around 35°C or even higher, and extreme values of 37°C or 38°C possibly being recorded. In the coming days, the dry, hot air mass will gradually strengthen, the area of high temperatures within Brazil will continue to expand, maximum temperatures will keep climbing, and the duration of high temperatures will be longer.

At this time of year, drier regions such as Minas Gerais and the interior of São Paulo experience their hottest weather. The situation is similar in southern Brazil, where afternoon temperatures are expected to be above the historical average for July, but nights will be colder in the high-altitude areas of the south, with frost even occurring.

It is understood that this round of high temperatures will be concentrated in central and northern Brazil, including coffee-producing regions such as Minas Gerais, São Paulo, and Espírito Santo, and the high temperatures will have many effects on coffee production.

It is currently Brazil's coffee harvest season. Although dry weather is conducive to picking, it also affects production. In Minas Gerais, the effects of drought and high temperatures are particularly significant. High temperatures may scorch coffee leaves, and also favor the reproduction and spread of pests and diseases. Combined with recent below-average rainfall, this ultimately leads to lower coffee yields and quality.

According to data from local consultancy Safras, Brazil has now harvested 66% of this year's total coffee production. However, the ongoing drought has caused production to fall below market expectations, with coffee beans showing smaller bean sizes. Combined with the upcoming high temperatures, production will decline further. The latest market estimate is that production will decrease by 2 to 3 million bags (60 kg per bag), which may keep coffee prices high.

In addition, data released by Brazil's Ministry of Health on July 18 shows that since 2024, suspected and confirmed dengue cases have risen to 6,365,727, deaths have risen to 4,691, and another 2,381 deaths are awaiting verification. Brazil currently ranks first in the world in confirmed and suspected dengue cases, and high temperatures are also worsening the illness.

The dengue fever outbreak is affecting Brazil's human resources and indirectly affecting coffee exports.

In response, the president of the Brazilian Coffee Exporters Council said that although the Port of Santos remains ahead in the transportation of overseas products, the delay rate has continued to rise since 2022 and remains at 80% to this day. He hopes the government can resolve the port delay problem as soon as possible.

The above content is compiled by CoffeeHunters, a coffee news website.