Brazil is experiencing a significant decline in coffee stocks due to a surge in global prices, leading farmers to sell most of their beans before the new harvest. This strategy has resulted in a forecasted shortage, with warehouses potentially empty by May, while prices continue to rise, impacting global buyers and consumers.
Brazil is currently facing a significant reduction in coffee stock levels, as revealed by reports from Azernews. Following the devastation of one of the most severe droughts in history, Brazilian coffee farmers promptly sold nearly all of their beans ahead of the new harvest, driven by soaring global prices that have doubled over the past year. This decision has allowed them to take advantage of record exports expected in 2024.
As the largest coffee producer globally, Brazil’s farmers have quickly exhausted their inventories to maximize profits before the new harvest season. The country’s exports are in stark contrast to Vietnam’s, where coffee exports have plummeted by 17.2 percent compared to the previous year due to severe weather conditions affecting robusta producers, according to Reuters.
The price of Arabica coffee has surged by 70 percent in 2024, with a substantial increase of nearly 20 percent this year, reaching its highest point ever. Similarly, Robusta coffee prices rose by 72 percent in 2024, peaking at $5,847 per ton on February 12, indicating a significant upward trend in coffee prices overall.
“We have never had such low stocks in February, but the new harvest is still far away. We will not have much coffee to sell until the next harvest begins. And it is not just us; it is everywhere,” stated Villian Cesar Freyria, a sales manager at Cocapec, Brazil’s third-largest coffee cooperative.
At Cooxupe, the largest coffee cooperative in the world located in Minas Gerais, although the warehouses may appear full, nearly all stock has been sold and is only awaiting shipment. Andre Silva Pinto, storage coordinator at Cooxupe, explained how tight the situation is for all producers.
According to the analysis firm Safras & Mercado, approximately 88 percent of the coffee harvest has already been sold, while brokerage Pine Agronegocios estimates that only 8 percent of the crop remains available on the market. This impending shortage could lead to completely empty warehouses by May, complicating the situation until the new harvest begins in late May or June.
The first shipment of fresh coffee beans is not anticipated before July, which will further strain market conditions. Prices are expected to keep rising due to this shortage, as farmers negotiate terms with international buyers. Consequently, the volatility seen in the global coffee market is likely to intensify, benefiting Brazilian producers but placing pressure on consumers and buyers in countries dependent on coffee imports.
Given the low stock levels and looming supply gap, consumers should prepare for potential increases in coffee prices and availability issues. The coffee industry is responding to the challenges posed by climate change, researching more resilient coffee varieties and sustainable farming practices as essential strategies for adapting to unpredictable weather conditions.
Brazil’s coffee stocks are dwindling sharply amid skyrocketing global prices, compelling farmers to sell their beans ahead of a new harvest. While historic price surges benefit producers, they also signal a forthcoming shortage that may disrupt supply chains and heighten prices for consumers. Ongoing climate challenges necessitate lasting adaptations in the coffee industry to ensure sustainable production in the future.
Original Source: www.azernews.az
