Brazil’s coffee stocks are dwindling as farmers sell record amounts due to soaring prices, leading to concerns over impending shortages and rising costs for consumers. Concurrently, Vietnam’s exports decline due to adverse weather, creating a volatile global coffee market. The anticipated gap until the new harvest adds to the uncertainty for buyers and consumers alike.
Brazil’s coffee stocks are facing significant declines as coffee warehouses, typically filled with a substantial inventory of coffee beans, are now nearly depleted. Following recovery from an unprecedented drought, farmers sold almost all their beans well in advance of the anticipated harvest, primarily due to a near doubling of global prices over the previous 14 months, reaching a historic peak.
As the world’s foremost coffee producer, Brazil has exhausted most of its coffee stocks to take advantage of record exports for 2024. Conversely, Vietnam, the second-largest exporter, experienced a 17.2 percent drop in exports compared to 2023, attributed to adverse weather conditions affecting robusta coffee producers in the region.
The price of Arabica coffee has surged by 70 percent in 2024, with an additional increase of nearly 20 percent this year, achieving an unprecedented price level. Robusta coffee prices also escalated, peaking at $5,847 per ton on February 12 of this year, reflecting a 72 percent rise in 2024.
“We have never had such low stocks in February, but the new harvest is still far away. We won’t have much coffee to sell until the next harvest starts. And it’s not just us, it’s everywhere,” remarked Villian Cesar Freyria, sales manager at Cocapec, Brazil’s third-largest coffee cooperative.
A parallel trend is observed at Cooxupe, the largest coffee cooperative globally, where almost all inventory has been sold and awaits shipment, according to storage coordinator Andre Silva Pinto. Reports from analytical firm Safras & Mercado suggest that around 88 percent of the coffee has been sold, while brokerage firm Pine Agronegocios indicates that a mere 8 percent of the crop remains available in the market.
Due to decreased exports, Brazilian coffee warehouses may run dry by May, preceding the new harvest scheduled for late May or June, with fresh bean shipments unlikely before July. This situation presents additional challenges for the market, as coffee prices are projected to rise in light of shortages and ongoing negotiations between farmers and international buyers.
The current shortage is escalating volatility in the global coffee market, providing benefits to Brazilian farmers while inducing challenges for consumers and international buyers who depend on cost-effective coffee imports. The ongoing low inventory levels, along with an impending supply shortage, could lead to price hikes for consumers, accompanied by potential disruptions in coffee availability. The coffee industry is also looking for adaptive measures to counter the impacts of climate change, such as investing in resilient coffee varieties and sustainable farming practices.
The decline in Brazil’s coffee stocks has ignited concerns over impending supply shortages, with farmers capitalizing on soaring prices while global demand continues to rise. As Brazil, the leading coffee producer, encounters dwindling inventories poised for empty warehouses by May, uncertainties loom for consumers and international buyers. The industry is compelled to navigate the challenges posed by climate change through innovative agricultural practices to sustain the coffee supply chain moving forward.
Original Source: www.azernews.az
