Bad Brazilian Rains Could Mess With Coffee and OJ Prices
Farmers may have serious irrigation struggles this year.
Brazil is home of samba, soccer, and the caipirinha. It's also the world's most significant exporter of coffee beans, sugar, and orange juice.
That's why bad meteorological fortunes for South America's biggest country could spell trouble for fans of coffee and mimosas. According to Bloomberg, Brazil's traditional rainy season hardly dropped any rain, causing farmers in the center and south of the country to wonder how their arabica beans and orange trees can survive.
In the areas around Sao Paulo and Minas Gerais, January to April generated less than half of normal precipitation levels, aWhere Inc. CEO John Corbett told Bloomberg.
Not only did that affect the coffee crop at a critical time for bean growth, but it's left farmers who count on this rainfall to provide for irrigation throughout the year (about 30 percent of the orange crop and 15 percent of the coffee crop) wondering when— not if— their supply will run out.
"My irrigation reservoir is drying up now — that usually happens in August," Mauricio Pinheiro, who runs a 131 acre plantation in the Alta Mogiana region of São Paulo (the Brazilian state, not the city). "I'm really concerned about running out of water in the coming months."
On top of all that, the prospect of shriveled oranges and unpalatable coffee may only exacerbate the soaring prices associated with agricultural crops in recent times. Coffee prices have already hit a four-year high on the Intercontinental Exchange Futures market, and shrinking the supply from such an important source can only serve to push that upward. It'd also mark the second straight bad year for oranges, with this year's crop already down 31 percent in size from the previous one.
So if you find yourself feeling squeezed by orange juice prices or a little steamed about the cost of a cup of coffee, you might want to learn some Portuguese. That, or chalk it up as yet another signal that climate change's potential impact on our food supply is a threat worth taking seriously.