(Bloomberg) -- The severe frost that ravaged major arabica-coffee areas in Brazil earlier this week is especially deadly for young trees, which could greater losses for farmers and hurt production for years.
The death of young trees increases the likelihood that the crops even two years from now will be compromised, according to Judy Ganes, a consultant who has covered the market for more than three decades. Farmers will have trim off damage, destroying yields, or replant their fields.
For Joseph Reiner, a grower in Monsenhor Paulo municipality, in the south of Minas Gerais, the freezing temperatures hurt as many as 120,000 coffee seedlings out of 200,000 planted less than a year ago. About 20% to 30% of the affected plants have significant stem injuries.
“There’s a big chance of losing these plants,” he said in an interview Thursday.
Arabica-coffee futures have rallied to multiyear highs after a frost devastated some of Brazil’s most productive fields from Sao Paulo to Minas Gerais. Losses for next year’s crop are estimated at 4.5 million bags, according to Exportadora de Cafe Guaxupe Ltda, an exporting company in Guaxupe, Minas Gerais. In 2020, which is a higher-yielding crop that’s comparable to 2022’s, Brazil harvested about 49 million bags of arabica-beans, according to Conab.
The freeze will have the greatest impact on coffee trees under 4 years old. Because of their fragile root systems, trees younger than two usually need be eliminated, while trees between 2 and 4 years old often have to be drastically trimmed and won’t produce the following crop year, said Regis (NYSE:RGS) Ricco, a director at Minas Gerais-based RR Consultoria Rural.
The consulting firm has been providing technical loss reports to growers who are going to seek debt renegotiations due to the frost damage. In some regions, farmers lost everything they had.
“Some farmers will have a difficult situation as they got loans from banks to fund irrigation systems, plantings and machinery,” Ricco said. “The impact is stunning.”
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