Tuesday, August 04, 2026

Strike Threatens BHP’s Exports from World’s Largest Bulk Export Port

Port of Port Hedland, Australia — Port Hedland is the world's largest bulk export port (Pilbara Ports)

A last-minute meeting on Tuesday, August 4, appears to be the final hope to head off a planned strike set for two days that would bring BHP’s iron exports to a halt and could further interrupt operations at Port Hedland, Australia. The Combined Ports Unions assert it has been negotiating for eight months and that it will begin to ramp up pressure on BHP after a brief strike on July 16.

The combined organization, which represents three unions, filed a notice at the end of last week after the latest negotiating session failed. It officially informed BHP and the authorities that the combined workforce would conduct a protected industrial action under Australian labour law. In the first phase, on August 8, it will impose a 24-hour ban on loading ships, and then on August 9, it will conduct a full work stoppage at Port Hedland Bulk Export Terminal. A separate electrical union said it would join the work stoppage on August 9.

BHP reportedly ships around 800,000 metric tons a day of iron ore from Port Hedland. The port is also used by both Forescue and Hancock Prospecting, although those companies are not part of the current contract negotiations.

Port Hedland is one of the ports of the Pilbara, which combined, make up the largest bulk export port operation in the world. Last year, Pilbara Ports handled a record of just over 804 million tonnes of exports and imports, representing an export value of A$150 billion (US$104 billion). The Port of Port Hedland constitutes the bulk of the volume, having handled over 580 million tonnes of throughput in FY 2025-2026.

The strike would come as the port is already experiencing delays. At the end of June, Lloyd’s Intelligence reported waiting times of up to eight days for vessels.

During the last job action, the unions brought out "Scabby the Cat" to highlight the money BHP makes from the exports while not offering what it said is a fair contract (Western Mine Workers Alliance - WMWA)

BHP said that a stoppage would impact A$120 million (US$84 million) in daily revenue and cost the Western Australia government as much as A$6.85 million (US$4.8 million) in royalties. The company said it would likely be able to recoup the losses over the remainder of the year.

The company said it is frustrated by the lack of progress, telling Australian media it has offered a 16 percent pay raise. It reportedly has asked Australia’s Fair Work Commission to moderate Tuesday’s talks.

For its part, the leadership of the combined unions called the progress in the negotiations “glacial.” The unions represent about 450 operators and maintenance workers, and they are demanding a four-year collective agreement. They said there needs to be “enforceable wage and condition protections.”

About 100 members had walked off the job for eight hours on July 16. BHP said it resulted in minimal disruption as seven ships had continued to load.

Seafarer Happiness Under Pressure Due to Workload and Wages

The Seafarer Happiness Index continues to slip, reports The Mission to Seafarers, not only due to the shocks from the war in the Persian Gulf but also from persistent issues that are steadily eroding crew morale. After seeing an upward trend, the index has slipped over the past two quarters, with the organizers of the survey highlighting issues ranging from workload and lack of time ashore to the financial pressures coming from perceptions of stagnant real-wage buying power.

The overall Happinex Index fell to 6.87 (out of a scale of 10) during the second quarter. It was 7.18 in the first quarter and 7.26 in the fourth quarter of 2025.

The decline confirms that the hoped-for recovery after a challenging start to the year has failed to take hold, says the Mission to Seafarers. The report highlights that the industry is in a transition, which it calls “from acute shock to chronic strain.”

“Seafarers are extraordinarily resilient, but we must not mistake resilience for unlimited capacity; endurance is not the same as well-being. The fundamentals that crews are asking for are strikingly basic: enough rest to recover, connectivity to sustain family life, quality food, and pay that justifies the sacrifice,” says Ben Bailey, Director of Programme, The Mission to Seafarers.

Time ashore continues to be one of the most persistent issues. Shore leave scores fell this quarter to 5.72, the lowest by a significant margin, with time ashore increasingly sacrificed to intense schedules, short port stays, and restrictions on port and terminal access. Further, the report highlights that workload management scored 6.20, amid a relentless cycle of six-on, six-off watchkeeping, rapid turnarounds, heavy paperwork, and inspections, with rest hours, most alarmingly, recorded “just for authorities and filing.”

The report also frames a deepening recruitment and retention challenge, with pay increasingly judged against the total life package available ashore rather than historical maritime wages. The sponsors and The Mission to Seafarers warn of the dangers as the industry continues to face declining numbers and difficulties attracting new workers at all levels.

On the positive side, seafarers are giving high scores to crew interactions (7.49) and connectivity (7.46), showing, according to the report, that seafarers continue to draw strength from crew relationships and from staying connected with family. The report says that where companies get it right, the best operators respect sign-off dates, ensure timely reliefs, offer merit-based promotions, and maintain modern tonnage.

The Mission to Seafarers has been overseeing the surveys of seafarers for the index for the past 11 years and continues its collaboration with Idwal, the global provider of independent vessel inspections. The reports are published quarterly and are available online.

The Iran war already has a winner: The world’s largest shipbroker notching record earnings from the ‘exceptional volatility’ in the Strait of Hormuz

Disrupted traffic in the Strait of Hormuz has benefited firms such as Clarksons. · Fortune · Majid Saeedi—Getty Images

Sasha Rogelberg
Mon, August 3, 2026

FORTUNE

As traffic in the Strait of Hormuz continues to be disrupted during the monthslong Iran war, one company is benefiting from the global trade chaos.

Clarksons, the world's largest shipbroker, reported its best-ever operating profit of £64.8 million ($87 million) for the six months ending June 30, a more than 55% increase from a year ago. The U.K.-based company founded in 1852 saw a nearly 40% increase in revenue to £413.5 million ($555.5 million).

CEO Andi Case attributed the jump to worldwide changes in supply chains as a result of the Iran war, increasing demand for companies like Clarksons. Shipbrokers are third-party firms that liaise between shipowners, such as Maersk, and cargo-holders, like retailers.

"Clarksons delivered a record first half performance, reflecting both the investment into our underlying business and the exceptional volatility caused by the disruption to global trade from global conflict including the situation in the Strait of Hormuz," Case wrote in a statement on Monday. "We expect the full year performance of the Group to be materially ahead of market expectations."

He added that the disruptions have "created a pronounced shock across global shipping markets" that have reshaped trade routes and caused a "period of operational dislocation" followed by an increase in both freight rates and hedging activity.

Since the onset of the war in February, traffic in the Strait of Hormuz has dwindled from its prewar rate of more than 100 ships per day passing through the chokepoint to about 33 today, according to maritime data tracker Kpler.

Despite President Donald Trump signaling the resumption of peace talks after canceling a renewed offensive against Iran, disruptions in the area look to continue, with Tehran expanding the war across the Gulf region.

That includes Yemen's Houthi movement blockading Saudi Arabian maritime traffic near the Bab el-Mandeb Strait. Ukraine's drone attacks on Russia have also suspended shipping to Black Sea ports and trade corridors key for grain exports.

These supply-chain upheavals have mounted pressures on certain industries like aviation, where jet fuel costs have soared, and agriculture, which has dealt with shortages of key chemicals used in fertilizers as a result of Strait of Hormuz closures. But as those sectors try to cope, companies like Clarksons thrive.

"In any market, any disruptions, obviously, create some kind of a zero-sum game," Jean-Paul Rodrigue, a professor of maritime business administration at Texas A&M University at Galveston, told Fortune. "That is, some actors are losing and the others are gaining the equivalent loss."

Why Clarksons is winning big in times of geopolitical chaos

According to Rodrigue, the shipbroker's record-breaking earnings are a matter of simple supply and demand: With fewer ships passing through the Strait of Hormuz, the need increases for third parties like Clarksons, which can help connect retailers to ships actually able to transport goods.

Like any broker, companies like Clarksons receive a share of the transactions between the two parties. So when the cost of shipping increases, a brokerage's share likewise increases.

"When you have geopolitical instability, of course, it disrupts the market," Rodrigue said. "It creates uncertainty. It creates a lack of knowledge because nobody knows what the hell is happening. Uncertainty, therefore, actually increases the importance of such firms because people are getting a bit more desperate."

But uncertainty doesn't always mean winning big. In March 2025, ahead of the Trump administration's steep tariffs and amid continued conflict between Ukraine and Russia, Clarksons said the trade tensions would have an adverse impact on revenues.

The Iran war, however, has had the opposite effect. Sea freight routed near the Strait of Hormuz nearly quadrupled in the first two months of the conflict, according to data from the International Rescue Committee, primarily as a result of steep insurance premiums associated with navigating the region. The higher demands and costs of doing business presented a strong opportunity for companies like Clarksons.

"They just behave rationally," Rodrigue said. "Market positions change…and when the market position changes, obviously supply and demand change, and those who are at the right end of the stick are going to benefit."

This story was originally featured on Fortune.com

Fortunes Buoyed by Hormuz Crisis, Clarksons Posts a Record First Half

Throngs of ships at anchor off Fujairah, July 2026 (Sentinel-2 / ESA)

Its fortunes buoyed by conflict in the Mideast, world-leading shipbroking firm Clarksons is having a spectacular year, posting its best-ever results for the first half and predicting a better-than-expected finish to 2026.

War is usually good for shipping, within limits, and brokers are well-placed to benefit. For Clarksons, the disruption at Hormuz in the first six months of the year yielded a 38 percent jump in revenue and an underlying profit of $83 million, a company record for the first half.

In a brief statement, CEO Andi Case cited "exceptional volatility" in the markets caused by trade disruption, to include the on-and-off Hormuz shutdown. He predicted that the firm's full-year performance would be "materially ahead of market expectations."

The dynamics of the Hormuz shutdown "shock" were a primary driver of the firm's outsize success in the first half. The disruption drove up freight rates, forced operators to readjust routing and reposition vessels, and increased tonne-mile demand. For those with ships available in the right place and the right time, it was an excellent opportunity for earnings - and for broking as well. Demand for freight derivatives ran high, too, as charterers moved to hedge their exposure to changing rates.

"I am extremely proud of our colleagues across the group, whose exceptional hard work, commitment and client focus have made this performance possible," Case said. "We look forward with confidence."

Clarksons' strong results and optimism saw its share price jump by about six percent in morning trading to reach a new all-time high of about $67.75. Investors can also look forward to an interim dividend of 47 cents per share, up from 44 cents last year.

BP Earnings Surge to $5.7 Billion on Oil Price and Refining Boom

By Tsvetana Paraskova - Aug 04, 2026

BP more than doubled its profit for the second quarter from a year earlier on the back of higher oil and gas prices and stronger refining margins driven by the shock supply disruption in the Middle East.

BP on Tuesday reported an underlying replacement cost (RC) profit, the closest metric to net profit closely watched by analysts, of $5.7 billion for the second quarter, up from $3.2 billion for the previous quarter, and more than doubled from the $2.35 billion for the same period of 2025.

The Q2 earnings beat the average analyst consensus of $5 billion.

The jump in oil and gas prices, combined with significantly higher refining margins and stronger oil and gas trading profits from a year earlier, boosted BP’s underlying earnings above analyst expectations.

The surge in the underlying result mainly reflected higher liquids and gas realizations, including the impact of price lags, stronger realized refining margins, and stronger customer results, partly offset by higher exploration write-offs, BP said.

Moreover, “The oil trading contribution for the second quarter and first half was significantly higher compared with the same periods in 2025,” BP said.

The UK-based supermajor, like its European peers Shell and TotalEnergies, benefited from the higher oil prices, the spike in refining margins, and the bumper trading profits from extreme market volatility.

Last week, Shell also reported more than doubled second-quarter earnings from a year earlier, as higher oil and gas prices, record refinery utilization, and strong trading boosted profits to above analyst expectations.

Other European majors, including Eni, TotalEnergies and Equinor, also saw their profits jump from a year earlier as oil and gas prices surged during the Middle East crisis and delivered windfall earnings to the biggest energy firms.

For BP, the earnings jump comes at a crucial moment for the company as CEO Meg O’Neill looks to simplify the business to focus on the most profitable assets in a bid to create shareholder value and show investors that BP’s stock can be attractive again.

“We need to take a clear look at ourselves: assessing what needs to change, stopping what holds us back and building strength where it matters. We have to get fit to grow,” O’Neill said in the earnings release.

By Tsvetana Paraskova for Oilprice.com

Saudi Aramco’s Adjusted Profit Jumps 33% as Oil Prices Surge

By Tsvetana Paraskova - Aug 04, 2026

Saudi Aramco saw its adjusted net income jump by 33% for the second quarter from a year earlier as high oil prices and the oil giant’s ability to re-route most crude exports more than offset the constrained flows at the Strait of Hormuz.

The state giant Aramco on Tuesday reported an adjusted net income of $33.385 billion for the second quarter, up by 33% from the $25.19 billion for the same period of 2025 and beating an analyst consensus of about $31 billion.

Saudi Aramco’s average realized crude oil price jumped to $108.1 per barrel for April to June, the period in which Brent oil prices averaged $97 a barrel.

The oil giant’s average realized price compares with $76.9 per barrel realizations for the first quarter of the year and $66.7 a barrel for the second quarter of 2025.

Aramco kept its Q2 2026 base dividend of $21.9 billion, to be paid in the third quarter to shareholders, the majority of which is the Kingdom of Saudi Arabia.

Despite the major disruption to flows in the second quarter, Aramco benefited from its diverse asset base, including strategic infrastructure such as the East-West Pipeline, storage capacity, and export terminals, President and CEO Amin Nasser said.

“That enabled us to sustain production and exports while advancing key projects, despite the challenging regional environment,” the executive noted.

Ziad Al-Murshed, Aramco’s Executive Vice President and CFO, commented, “Our resilience stems from decades of long-term planning and our strategic domestic and international infrastructure that provide flexibility and optionality.”

Saudi Aramco has re-routed its crude oil exports to the Red Sea port of Yanbu to avoid the Strait of Hormuz constraints. But this new route was challenged two weeks ago when the Iran-aligned Houthis threatened to block Saudi-linked shipments in the Red Sea and the Bab el-Mandeb Strait, prompting dark transits through Bab el-Mandeb and new re-routing of oil exports northward to Egypt and the Suez Canal.

By Tsvetana Paraskova for Oilprice.com

Despite Houthi Threats, Saudi Tanker Terminal Carries On

Full berths at Al Muajjiz, south of Yanbu, August 1 (Copernicus / Sentinel-2 / ESA)

The Houthi blockade on Saudi seaports produced visible results last month, cutting daily exports by as much as 40 percent, but shipping appears to be moving through and past the threat zone in recent days.

Iran-backed Houthi militants hit multiple tankers last month with antiship missiles, including NCC Masa, Encelia, Layla (unconfirmed) and NCC Ghazal - all Saudi-owned and Saudi-flagged. The militant group also hit the Saudi refinery at Jizan and the crude processing station at Abqaiq.

Most traffic has been unaffected: the Houthis have emphasized that they would only target vessels calling at Saudi ports, and that Bab el-Mandeb will remain free and open for all other passing traffic. The group has denied recent rumors that it would be setting up a fee structure for passage, as Iran has attempted to do at the Strait of Hormuz.

Despite last month's strikes and the Houthis' threats, the tanker traffic volume at the Saudi Red Sea loading terminal at Yanbu is strong, according to satellite imaging reviewed by Bloomberg, which revealed five tankers at the pier over the weekend - a tie with a previous record. Yanbu-related transits through Bab el-Mandeb proceed apace (though some without AIS transmissions, notably the Greek tanker Lesvos and the Indian-flagged supertanker Desh Vaibhav). Consistent with previous reporting about a Chinese agreement with Houthi leadership, Chinese vessels continue to transit through the waterway with AIS on, unbothered on their way to and from Yanbu.

Flag state is a hindrance for others: six vessels with a higher risk profile appear to be taking the long way around to use the opposite entrance to the Red Sea. A small flotilla of Saudi-flagged tankers has headed south around the Cape of Good Hope, avoiding the Gulf of Aden, according to Windward. The rerouting will add about one month to the transit to Yanbu in ballast.

Saudi leaders may be contemplating a renewed military intervention in Yemen if Houthi provocations continue, though analysts suggest that it will not likely be at the scale of the full-force Saudi invasion of 2015, given the poor outcome of that engagement for Saudi forces.

"Most plausibly it would be a Saudi-enabled Yemeni offensive, possibly supported by small numbers of Saudi personnel in command, intelligence, artillery, air-defense, engineering, and special-forces roles," suggested analyst Cyril Widdershoven to the Jerusalem Post. The push would likely come in the rugged, mountainous area of Al-Bayda, strategically located at the southeastern edge of Houthi territory.

Cargo Ship Attacked in Omani Sector of the Strait of Hormuz

As talks between Iran and Oman on control over the Strait of Hormuz move forwards, a new attack has been reported off the Musandam Peninsula, in the Omani coastal channel used by GCC shipping interests.

At about 2200 hours on August 3, the crew of an unnamed cargo vessel broadcast a VHF distress signal, reporting that their ship had been hit by an unknown projectile. The incident occurred at a position about 20 nm to the northeast of Khasab, the midpoint of the "neutral" Omani coastal route through the strait.

Maritime security consultancy Vanguard Tech reports that the attack was more serious than the UKMTO brief suggests. According to its sources, the bulker Minoan Pioneer (IMO 9471630) was hit in her engine room, resulting in a complete blackout and a fire in the accommodations area. The third engineer went missing following the blast. A crew-led firefighting operation was still under way Tuesday morning local time.

A near-miss attack occurred about 24 hours earlier in the same region, about 20 nm northeast of Khasab. In that prior incident, the master of an unnamed tanker reported hearing a blast near the vessel. No damage occurred and the ship continued safely on its way.

All prior kinetic attacks in this area of the strait have been Iranian in origin. Iran objects to the Omani route, as it bypasses Tehran's "Persian Gulf Strait Authority" administrative regime; Iranian hardline leaders claim a sovereign right to control traffic through the strait, despite its status as a free and ungated waterway prior to the U.S.-Israeli conflict with Iran.

To preserve some degree of long-term control - and collect fee revenue from passing vessels - Iran is currently negotiating with the government of Oman on the contours of an acceptable split in administrative responsibilities. According to the New York Times, a proposed joint Iranian-Omani control regime for the strait would divide oversight of the channels into two directions. Inbound traffic would pass through a northern channel closer to the Iranian coast, and would be administered by Iran's authority. Outbound traffic would pass through an Omani-controlled lane. The two states would equally split the revenue from a "service fee" for each transit, a cost to shipping which did not exist before the war.

An American official who was briefed on the talks denied this account, telling the Times that the control scheme would be both temporary and toll-free.

Iran and the White House do not publicly agree on whether they are negotiating towards a peace agreement, though President Donald Trump claims that talks are progressing quickly and a "deal is imminent." On Sunday, the president called off previously-announced airstrikes on Iran, claiming that he wished to give diplomacy time to work and that he wanted to give Iran's leadership "every last chance before decapitation." Iran denies that talks with the U.S. are ongoing.

"Our negotiations are with Oman, we are focused on reaching an understanding on a route that will ensure safe shipping traffic through the Strait of Hormuz," an Iranian Foreign Ministry spokesperson told Bloomberg. "These are bilateral negotiations between the two coastal states. Others can play a constructive or destructive role in this process, but the issue is with Iran and Oman."

UAE Resumes Cross-Gulf Trade with Iran

Jebel Ali, UAE — Jebel Ali Port, usually the biggest and busiest port in the Middle East

A little-appreciated consequence of the all-out war that broke out in the Gulf on February 28 has been the disruption to the United Arab Emirates’ trade with Iran.

A foundation of the Emirates’ extraordinary growth since 1979 has been its role as the import-export gateway to Iran. Not so long ago, about 90 percent of Iran’s trade with the outside world passed through DP World’s massive container terminal at Jebel Ali, where, from a central distribution point, global container liners transferred cargo to smaller ships servicing numerous Iranian ports within the Gulf. This was a hugely profitable business for DP World, the revenue stream for the Dubai government providing capital for the early phases of the Emirate’s explosive growth. The growth and profitability of Emirates Airline followed a similar pattern, with Dubai acting as a hub for Iranians wanting to switch from local networks and use the services of Emirates Airline’s unmatched global footprint. Business and trade with the supposedly isolated Islamic Republic were a huge engine for growth.

So, in this regard, Iran has not really been isolated since 1979 – it has been thoroughly integrated with the economies of the GCC, notwithstanding the strictures of global sanctions applied on Iran. There has been a strong mutual inter-dependency. So, while there have been political differences between the GCC and Iran, principally over Iran’s desire to be seen as the dominant nation in the region, the strategic aim behind its regional expansionism program, which sought to subvert the political system in many neighboring countries, there have always been strong economic reasons to maintain a working relationship. Expatriates in Dubai who never meet any locals may not appreciate just how many Iranians and Iranian businesses operate in Dubai, and how a large proportion of the Emirati citizen body has roots in Iran.

Private enterprise and commercial interest are powerful forces in the Emirates, and therefore it is no surprise that trade has once again started flowing across the Gulf, notwithstanding that Jebel Ali is temporarily cut from global supply through the Strait of Hormuz. Kpler analyst Rebecca Gerdes, who keeps a close eye on container movements in the Gulf, reports that more than 60 containerships made cross-Gulf passages in July, up from 10 in June. In the period up until July 31, traffic was averaging a daily container liner in each direction between Jebel Ali and the Rajaei civilian port in Bandar Abbas. Five container-carrying vessels, all flying flags of convenience, are apparently shuttling to this route, namely the Yekta 4 (IMO 9303675), Mehran 1 (IMO 1111117), Farahi 2 (IMO 9034688), J. Pioneer (IMO 9116711), and Capilano (IMO 9358577).

The route followed by Capilano and other container liners between Jebel Ali and Bandar Abbas Rajaei (red), keeping towards the Iranian coastline (Google Earth/CJRC/Kpler data)

The conflict between Iran and the United States has in recent days settled into what appears to be an economic contest of endurance, pitching the U.S. desire to limit inflation and oil price rises against Iran’s need for finance to fuel its war effort and to keep the population happy with essentials. The U.S. naval blockade of Iranian ships and ports being enforced from outside the Gulf applies most of the leverage the United States needs to have to keep an advantage in this battle, and the volumes being carried on the Jebel Ali to Bandar Abbas route will not make a substantial impact. The contents of the containers on the route one can expect are being closely monitored, and will tend towards medicines and foodstuffs rather than dual-use electronics and fertilizer.

Still central to the trade is Jebel Ali, with its sophisticated cargo handling and logistic facilities. The difference with the pre-war era is that Jebel Ali is now being serviced from the landward side, with goods being trucked (or railed) in and out from Fujairah, Khor Fakkan, Sohar, and Salalah, and from Europe and beyond by trucks coming from the Mediterranean and Saudi west coast ports. Clearly, these elongated trade routes, involving switches between transport means en route, are economically inefficient – but needs must. Moreover, between the UAE and Iran, there is a baseload of bilateral trade; the fresh fruit and vegetables in the Spinneys supermarkets in Dubai, amongst many other classes of goods, come largely from Iran.

Oman’s Foreign Minister has been an advocate for a new security regime in the Gulf, calling for the end of the containment of Iran and its integration into a legal and practical framework shared by all Gulf states. There is already a degree of economic integration between all Gulf states, as the resumption of cross-Gulf trade shows. But the bar to deeper integration at both the economic and political level appears to be an unwillingness on Iran’s part to observe legal and practical frameworks which the others all have, most noticeably the United Nations Convention on Law of the Seas (UNCLOS), the 1968 UN Non-Nuclear Proliferation Treaty, and the IMO’s 1968 Traffic Separation Scheme covering the Strait of Hormuz.

Brazil coffee faces El Niño headwinds, but crops more resilient

Reuters

July 13, 2026

SAO PAULO — El Niño could cut Brazil’s expected record harvest by up to a fifth, according to the Brazilian Coffee Industry Association (Abic), as excessive heat and irregular rainfall threaten production.

For this year, state crop agency Conab forecast a bumper total output of 66.7 million 60-kilogram (132.3 lb) bags of arabica and canephora beans, with the latter including varieties like robusta and conilon.

But deteriorating weather conditions amid an El Niño weather cycle could dramatically reduce production, said Abic executive director Celirio Inacio da Silva.

“We are now talking about a crop loss of 15 per cent to 20 per cent, which in a normal year would be within expectations. But in the current scenario, that is very bad news,” he said in an interview.

Despite the gloomy outlook, coffee growers are better prepared than during previous El Niño episodes thanks to technological advances producing a more climate-resistant crop.

“We’ve made significant advances and today we’re able to plant and harvest more efficiently,” said Silva.

Coffee farmers in recent years have shored up their ability to mitigate climate risks by rapidly expanding irrigation systems, investing heavily in such technology to reduce their dependence on increasingly erratic rainfall driven by climate change.

Even so, El Niño is expected to disrupt the crop’s biological cycle, particularly during the flowering period in the second half of 2026. Excessive heat and irregular rainfall can lead to uneven and unsuccessful flowering, specialists said.

“Irregular ripening creates quality problems and makes harvesting more challenging,” said Wellis Caixeta, coffee purchasing manager at Minas Gerais-based cooperative Expocacer.

The 2023/24 El Niño, combined with heatwaves and irregular rainfall, cut Brazil’s 2024 coffee crop from an initial government forecast of 58.8 million to 54.2 million 60-kg bags. Despite arabica’s positive biennial cycle, output rose just 0.2 per cent, while conilon productivity fell 5.9 per cent.

El Niño may already explain some anomalies, such as unusual rainfall in southeastern Brazil over the past month.

Expocacer estimates that rainfall exceeding 50 millimeters in arabica-growing regions about 40 days ago delayed the harvest and caused a significant amount of coffee cherries to fall to the ground, hurting bean quality.

Espirito Santo, Brazil’s largest producer of canephora coffees, has also faced irregular weather this year, with longer intervals between rainfall and shorter, more intense downpours, said Luiz Carlos Bastianello, president of Cooabriel, Brazil’s largest canephora cooperative.

Growers in the state are concerned El Niño could prolong dry periods and excessive heat through January 2027, disrupting bean filling, Bastianello said.

While conilon production in the state is expected to decline by 15 per cent this year due to conilon’s natural biennial cycle - which alternates between high- and low-yield years - Bastianello said it would be too early to forecast the impact of El Niño in 2027.

“Heat is the biggest risk for severe crop loss. Above 27 degrees Celsius (80.6°F), Canephora slows its metabolism, and at 35°C (95°F) it stops altogether. The damage is often greater than from the lack of water itself,” he added.

Conditions have been more favorable in northern Brazil, where temperatures and rainfall have remained largely within seasonal norms this year. In Rondonia state farmers expect a record harvest of 3 million 60-kg (132.3 lb) bags, above crop agency Conab’s forecast of 2.77 million bags.

Heat and drought associated with El Niño are unlikely to have the same impact on Rondonia’s robusta crop as on arabica-producing regions, said Juan Travain, president of state coffee association Caferon.

“Coffee is highly sensitive to temperature fluctuations, but virtually all robusta plantations are irrigated, and some also use water-based cooling systems. Many arabica farms, by contrast, still lack irrigation,” he said.

(Reporting by Victoria Pacheco; Editing by Oliver Griffin)

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