Global Coffee Prices Rise as Inventories Dwindle

게시됨 2022년 1월 4일

Global coffee prices continue to rise due to various factors, such as concern that the spread of the omicron variant will result in global lockdowns and travel restrictions that shut down coffee shops and limit coffee consumption. Brazilian Arabica coffee prices have spiked due to low global supplies due to poor weather conditions and supply chain disruptions. Colombia’s 2021/22 coffee production is set to reach 13.8 million bags, dropping from the previous estimate of 14.1 million bags, due to potential heavy rains from La Nina. Limited Vietnamese Robusta coffee supplies have also raised coffee prices. Between January and November, Vietnamese coffee exports dropped by 4.4% YoY, decreasing to 1.4 million metric tons.

Brazilian coffee prices rise due to bad weather and supply chain disruptions

Brazilian Arabica coffee prices have spiked due to low global supplies from poor weather conditions and supply chain disruptions. Drought and recent frosts have hampered Brazil's coffee production. According to Conab, a Brazilian agricultural crop agency, Brazil's Arabica coffee crop is set to fall by 36% from 48.8 million bags in 2020 to 31.4 million bags in 2021. According to the USDA, Brazil's coffee exports could drop by -27% YoY from a record 45.67 million bags in 2020/21 to 33.2 million bags in 2021/22 due to reduced coffee production.

Low rainfall has hampered Brazil's Arabica crop, pushing prices up. According to Somar Meteorologia, Minas Gerais, a region accounting for around 30% of Brazil's Arabica coffee production, received 33.8 mm of rain in the week ending 10 December, only 45% of the historical average last week. The flowering period for Brazilian coffee trees commenced in October, and insufficient rain could reduce coffee tree flowering leading to reduced coffee yields.

Conab raised its estimate for the total 2021 Brazilian coffee production from 46.9 million bags in September to 47.7 million bags in December. Conab increased its 2021 Brazil Arabica production estimate from 30.7 million bags in September to 31.4 million bags in December. The Brazil Robusta coffee production estimate was also raised to a record 16.3 million bags from 16.1 million bags in September. Coffee prices have also been hampered by concern over the omicron variant and the strength of the dollar.

La Nina hampers Colombian production

According to the USDA, Colombian 2021/22 coffee production could reach 13.8 million bags, dropping from the previous estimate of 14.1 million bags, due to potential heavy rains from La Nina. Colombian 2020/21 coffee production is also set to fall to 13.4 million bags due to supply chain disruptions and reduced yields from adverse weather conditions. According to Colombia's National Federation of Coffee Growers (FNC), the country's 2022 coffee crop could drop by -7.1% y/y to 13 million bags due to heavy rains damaging crops. Colombia is the second-leading global Arabica coffee producer.

Omicron variant set to hamper coffee demand

Another factor adding upward pressure on coffee prices is concern that the spread of the omicron variant will result in global lockdowns and travel restrictions that shut down coffee shops and limit coffee demand. Japan and Israel have shut down their borders, and other countries have placed travel restrictions. The International Coffee Organization (ICO) reduced its global 2021/22 coffee surplus estimate from 2.63 million bags to 2.39 million bags and increased its global coffee consumption forecast from 167 million bags to 167.26 million bags. Global 2020/21 coffee exports increased slightly by 1.2% YoY to 128.93 million bags.

Shipping disruptions limit Vietnamese coffee exports

Limited Robusta coffee supplies in Vietnam, the largest global Robusta producer, have also raised coffee prices. Between January and November, Vietnamese coffee exports dropped by 4.4% YoY, decreasing to 1.4 million metric tons. According to the United States Department of Agriculture (USDA), the estimate of Vietnam 2021/22 coffee exports has been lowered to 25.8 million bags from 28.8 million bags due to rising shipping costs and reduced availability of containers.

Sources:

Farming Portal. “Arabica Coffee Slips On Forecast For Higher Brazil Production.”
Bar Chart. “Arabica Coffee Slips On Forecast For Higher Brazil Production.”
Statista. “Coffee production in Brazil from 2010 to 2020.”
USDA. “Coffee: Semi-annual report - Brazil.”
International Coffee Organization. “Coffee price rise continues in November reaching a 10-year high.”
Statista. “Coffee production in Colombia from 2012 to 2019.”
Colombian Coffee Growers Federation. “Colombian coffee production reaches 13.9 million bags in 2020.”