Currently, Brazil is in the middle of its coffee harvest season, and according to data released by the consultancy Safras& Mercado, Brazil has already harvested 58% of this year's coffee crop, far ahead of the average harvest progress of 54% over the past 5 years.

The accelerated harvest progress is entirely due to the current relatively dry weather conditions, which are favorable for harvesting, but at the same time, the hot and dry weather may have an adverse impact on coffee production.

Judging from the actual harvest so far, coffee production is not as ideal as hoped, falling below market expectations, and there are cases of coffee beans being on the small side.This has also led some local institutions in Brazil to downgrade their forecasts for the new season's coffee production; for example, Marex Group cut its forecast for Brazil's arabica coffee production by 2.6 million bags to 44 million bags (60 kg/bag).

In addition, local coffee organizations say actual production is expected to be 10-15% less than anticipated, and reports indicate that in northern Espirito Santo, some coffee estates are producing less than 30% of what the market expected. Because the coffee beans are coming out on the small side, more beans are needed to fill a 60 kg bag.

But recently, in some Brazilian coffee regions, the lack of water has been fairly severe. In the sub-region of Alta Mogiana in Sao Paulo state, for example, there has been no rain for more than 100 days, and in Minas Gerais state, rainfall last week was 1.3 mm, only 24% of the historical average, following three consecutive weeks without rain.

Although earlier weather reports pointed to a cold snap, temperatures dropped only slightly when the cold snap arrived, and after it ended temperatures stayed as high as before; moreover, this cold snap brought no rain.

And according to Cooxupe, Brazil's largest coffee cooperative, rainfall recorded since May has been very low, water levels in some rivers have dropped, and soil moisture deficits in some areas warrant attention, because almost all coffee regions have recorded water deficits of more than 20 mm below the historical average for the same period.

The most serious situation at present is in the Cerrado region of Minas Gerais state, where the water deficit is as high as 44 mm and a drought warning signal has been triggered. Besides the lack of rainfall, average temperatures in the coffee regions are currently 2°C above the historical average for the same period, and according to the weather forecast, only Parana state is expected to get a small amount of rain, while conditions in the coffee regions will remain dry and drought-stricken over the coming weeks.

However, due to drought, current production has fallen short of expectations, and coffee prices both in Brazil and internationally continue to rise. According to local Brazilian reports, in June the average spot price of Robusta in Brazil was 1214.21 reais per bag (about 224 US dollars), the highest level since records began in 2001, and up 20.6% from the May average, while the average spot price of Arabica was 1349.21 reais per bag (about 249 US dollars), up 15% from the May average.

Internationally, Robusta coffee futures rose to 4000 US dollars per tonne due to reduced production from drought in Vietnam, and now with news of reduced production from drought in Brazil, prices have soared to 4627 US dollars per tonne. As for Arabica coffee futures, in addition to Brazil, drought weather has also affected countries in the Americas, especially North America, reducing Arabica production in the Americas and pushing futures prices up to 317.8 US cents per pound.

However, the market is currently worried about the La Nina phenomenon that will appear next, because over the past few years Brazil has been affected by La Nina, suffering severe drought and frost, which reduced Brazil's coffee production by more than 20. And this upcoming La Nina phenomenon may reduce coffee production in the 2025/26 year.