Recently, during the G20 summit held in Brazil, Luckin Coffee and the Brazilian Trade and Investment Promotion Agency (ApexBrasil) signed a Memorandum of Cooperation in Brasilia, the capital of Brazil. Under the agreement, on top of the two-year purchase of 120,000 tons of Brazilian coffee beans signed in June this year, Luckin Coffee will add another 120,000 tons to its purchase volume.

That is, over the five years from 2025 to 2029, Luckin Coffee will purchase a total of 240,000 tons of coffee beans from Brazil, worth 10 billion RMB. This is Luckin Coffee's largest coffee bean procurement plan to date.

In addition, according to a report by the consulting firm Safras, given the currently high international coffee prices, Brazilian coffee producers are taking advantage of the high prices to accelerate coffee sales. Brazil has now sold 70% of this year's coffee crop, ahead of 64% at the same period last year and the 67% average progress over the past 5 years.

Therefore, earlier the Brazilian Coffee Exporters Council (Cecafe) reported that in October coffee sales value was above average, reaching about USD 282.8 per bag. Amid such high prices, Brazil still set a record for the highest coffee export volume in October, reaching 4.926 million bags of coffee (60 kg/bag).

This is because local coffee growers said they recently needed funds to purchase fertilizer and pay employee wages, which spurred sales progress. At present, the Arabica coffee sales progress stands at 67%, while Robusta coffee sales progress stands at 76%.

In addition, Safras' report stated that Brazil has already pre-sold about 11% of its 2025/26 coffee crop, with Arabica coffee pre-sales progress at 16%, far below the 25% seen in the same period last year. This is because recent rises in international futures prices, a stronger US dollar, the depreciation of the Brazilian real, and concerns about a future decline in Brazil's coffee production have made green coffee traders adopt a more cautious attitude and slow down future coffee sales.

Brazil has been affected by severe weather throughout this year, making the next crop's coffee production highly unstable. Earlier, Brazil experienced its most severe drought in recent years, along with the threat of fires brought by the drought, which reduced the new crop's coffee production and also damaged the planting conditions and production potential of the 2025/26 new crop coffee.

Although Brazil has recently begun to see rainfall return, and although the rain can restore moisture to the drought-stricken soil and ease the pressure on coffee trees, it is not enough to make up for the damage caused to coffee trees by the drought and fires. Moreover, the rain has gradually intensified, and Brazil's National Institute of Meteorology recently issued an orange alert for heavy rainfall, with parts of 12 states in central Brazil to be affected, and rainfall in some areas could reach 100 mm within 24 hours, accompanied by strong winds of up to 100 km per hour.

This severe weather is not conducive to the growth of Brazil's coffee trees. Multiple institutions have already lowered their forecasts for Brazil's new crop coffee production, including the United States Department of Agriculture (USDA). According to its latest data, Brazil's 2024/25 coffee production is about 66.4 million bags, lower than the previous figure of 69.9 million bags. In addition, Brazil's ending stocks for 2024/25 are estimated at 1.2 million bags, down 26% from the previous year.

Although Luckin Coffee has signed a memorandum for coffee bean procurement worth over ten billion yuan with Brazil, providing considerable support to the Brazilian coffee industry, Brazil is still affected by severe weather, and the output for the upcoming crop season remains uncertain, and the uncertainty of Brazil's output also continues to push up international coffee futures prices.

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