Declining Coffee Stocks in Brazil Raise Concerns for Global Supply

Brazil’s coffee stocks have drastically diminished as farmers sold nearly all their beans ahead of the new harvest amidst record-high global prices. The forecast indicates that warehouses may be empty by May, posing serious implications for coffee supply and price stability. Meanwhile, the coffee market is experiencing increased volatility due to these shortages.

Brazil, renowned for being the world’s largest coffee producer, is currently experiencing a significant decline in its coffee stocks. Reports indicate that coffee warehouses, typically filled with millions of bags, are now largely depleted due to Brazilian farmers selling nearly all their beans prior to the new harvest. This decision has been influenced by an alarming rise in global coffee prices, which have nearly doubled over the last 14 months, reaching unprecedented levels.

Having recovered from a devastating drought, Brazilian farmers aimed to maximize profits by export sales, leading to rapid stock depletion. In stark contrast, Vietnam, the second-largest coffee exporter, reported a 17.2 percent decrease in its coffee exports, primarily due to adverse weather conditions impacting its robusta coffee production.

The prices for Arabica coffee surged by 70 percent in 2024 and nearly 20 percent this year, achieving record highs. Similarly, robusta coffee prices experienced a rise of 72 percent, peaking at $5,847 per ton as of February 12 this year.

Sales manager Villian Cesar Freyria of Brazil’s Cocapec cooperative remarked, “We’ve 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.” This sentiment echoes within the inventory status at Cooxupe, Brazil’s largest coffee production cooperative, where stock is sold out but awaiting shipment.

Garnering further insights, Safras & Mercado estimates that 88 percent of Brazil’s coffee production has been sold, with only 8 percent remaining on the market according to brokerage firm Pine Agronegocios. Such steep reductions could result in complete warehouse emptiness by May, ahead of the new harvest commencing in late May or June, compounding supply challenges.

The anticipated shortage threatens to amplify global coffee prices, adversely affecting consumers and international buyers, particularly in nations dependent on affordable imports. This situation has ignited volatility in the coffee market, compelling farmers to engage in negotiations with international buyers.

In summary, Brazil’s coffee stock decline, exacerbated by record-high prices and premature sale of beans, poses significant challenges for the global coffee market. The shortage of coffee is expected to lead to further price increases, particularly impacting consumers reliant on low-cost imports. Both Brazilian farmers and international buyers must navigate the uncertainties arising from this market shift caused by adverse weather conditions and climate change.

Original Source: www.azernews.az