| ESPIRITO SANTO DO PINHAL, Brazil
ESPIRITO SANTO DO PINHAL, Brazil Feb 12 In
Brazil's coffee belt, frost has long been the biggest risk for
farmers and commodities traders alike. But after years of
migrating to warmer regions, farmers here now find themselves
scrambling to overcome an unusual phenomenon: blistering heat.
January was the hottest and driest month on record in much
of southeastern Brazil, punishing crops in the country's
agricultural heartland and sending commodities prices sharply
higher in global markets. As signs emerged that the world's
largest coffee crop was withering, futures prices shot up 26
percent over a seven-day stretch to a nine-month high.
The heat wave has thrust many Brazilian coffee farmers into
the unknown. January, typically the wettest month for the coffee
belt, caught most farmers off guard, leaving them with few
options but to count their losses.
A few, such as Marcio Diogo, a third generation coffee
farmer in Espirito Santo do Pinhal in Sao Paulo state, are
scrambling to install irrigation lines to limit those losses,
which may have reached 30 percent of output on his 75-hectare
(185.2-acre) farm, according to his count.
"My grandfather started here 80 years ago ... never seen a
January like this," Diogo said walking through a field of 25,000
freshly planted coffee trees that he ordered six months ago.
"I've had to water this field six times by tractor," he went
on, something he normally doesn't have to do.
The drought couldn't come at a worse time for Diogo and
other farmers, who have struggled with weak global coffee prices
over the past two years. It's still unclear whether the recent
spike in prices, in part driven by Brazil's drought, will
eventually offset the loss in output from the dry weather.
Celso Scanavachi, an agronomist at the local coffee
cooperative Coopinhal, said farms in the region got only 10-12
centimeters (3.9-4.7 inches) of rainfall in January, less than
half the month's average precipitation.
Espirito Santo do Pinhal, nestled along the border between
two of Brazil's biggest arabica growing states, Minas Gerais and
Sao Paulo, is not alone.
Two hours to the north in southern Minas Gerais, which
produces 25 percent of Brazil's coffee crop, between 4.5 and 8.6
centimeters of rainfall fell last month, when 26.5-30.1
centimeters are average. No doubt, 2014 will go down as the
worst drought in recent history in Brazil's coffee belt.
The impact, however, is still hard to gauge. The government
estimated the crop at up to 50 million 60-kg bags before the
drought, while market estimates put it at 60 million bags.
Future estimates will likely fall for several months as analysts
and farmers get a more precise understanding of the damage.
"It's clear there will be losses but nobody knows yet how
big because this has never happened. We are in uncharted
territory," Lucio Dias said, a grower and sales director at
Cooxupé, Brazil's biggest coffee cooperative.
Whatever the damage, the world is unlikely to run out of
coffee anytime soon, thanks to the large stockpiles of beans
amassed in recent years.
RELIEF ON THE HORIZON
Some short-term relief appears to be on its way. A cold
front moved over southern Brazil on Wednesday and should bring
some moisture to agricultural crops in the coming days, though
widespread rainfall in the coffee belt is not expected until
Still, it's unlikely the rains will be heavy enough to
reverse the damage to the crops or make up for the rainfall lost
in January and early February.
"Those are the peak months for the rainy season and they are
over," said Celso Custodio, a senior meteorologist at forecaster
To be sure, Brazil's coffee belt has suffered droughts
before, but rarely in January, when the Southern Hemisphere
summer heat is offset by tropical downpours almost daily. The
dry season runs from April through September, and can sometimes
stretch into November but temperatures are lower then.
Volatility in coffee futures prices has traditionally
come with frost, hints of which can send contract prices up 10
percent in a matter of minutes.
The cold snaps of 1975 and 1999, the worst in recent
history, prompted farmers to migrate from the southernmost
growing regions most exposed to polar air blasts in winter, into
the warmer states of Minas Gerais, Bahia and Espirito Santo.
Subsequently, frost has had less of an impact on the coffee
belt since. For more than a decade, coffee has only traded
mildly on weather threats.
But this year's heat wave has changed that. Because a
majority of Brazil's coffee farms are heavily reliant on
rainfall, the first signs of a serious drought put markets on
Coffee futures prices in New York started January at
just under $1.12/lb and now are pushing $1.41/lb.
"Although irrigation is common in areas like the Cerrado or
Espirito Santo or western Bahia where it is more arid, nobody
has invested in it in South Minas because it has always rained
in January here," Dias, of Cooxupé, said.
TALLYING THE LOSSES
Accurately estimating the losses to the entire crop in
Brazil, the world's main supplier of natural - or sun-patio
cured - arabicas, is a monumental task fraught with complexity.
Overseeing a crew installing an irrigation line to a slope
of three-year-old trees that are particularly at risk to dry
weather due to their less developed roots and foliage, Diogo
surveyed the young trees deceptively full of coffee fruit.
He reached down and stripped a bow full of unripe coffee
fruit and cut cross sections through several of the fruit with
his pocket knife showing voids inside where pale green beans
would normally be forming if there had been rain.
After testing coffee fruit on several trees of varying ages,
Diogo estimated that he would harvest less than 40 bags a
hectare this year, if he's lucky, and not anywhere close to the
65 bags a hectare he brought in last season.
"The flowering of this crop was nearly perfect. Our hopes
were high," Diogo said as he pinched coffee cherries to test if
they had succumbed to the drought.
Coffee trees are commercially productive for a little more
than 25 years but must then be ripped out and replanted. The
youngest trees, or about 25 percent of Brazil's crop, are most
at risk to hot, dry weather. As much as 50 percent of the beans
on trees up to two years old in Espirito Santo do Pinhal are
likely lost without hope of recovery, even if rains came today,
according to Scanavachi, the agronomist.
Older trees of more than 10 years showed only minor losses
of less than 10 percent to the drought. Most trees, young and
old, showed very little growth in their branches and foliage,
which will hold and shade the fruit in the coming crop.
"Trees have lost productive potential for the next year,
too," Scanavachi said.
(Editing by Todd Benson, Josephine Mason and Diane Craft)