Top grower Brazil’s coffee supplies have never been lower
Baku, September 19, AZERTAC
For a look at just how short the world has become on coffee supplies, consider this: stockpiles in Brazil, the biggest producer globally, are headed for a record low, according to Bloomberg.
Inventories in the South American nation may dip to just 7 million bags by March, according to Silas Brasileiro, president of the National Coffee Council. A more comfortable level is between 9 million and 12 million bags weighing 60 kilograms, analysts say.
Brazil’s supply woes echo global scarcity, threatening to push prices higher amid a backdrop of persistent food inflation. Arabica stockpiles held at port warehouses monitored by the ICE Futures US exchange are at the lowest level in 23 years.
Meanwhile global demand keeps increasing, with consumption this season growing 1.5% after a 2% increase last year, according to research firm hEDGEpoint Global Markets.
Stockpiles “are so low that even if we have a good crop next year, Brazil may just barely have enough to serve demand,” said Nelson Carvalhaes, a board member of exporters group Cecafe. “We just need to have the rain.”
Tight global supplies led arabica coffee futures in New York to rise 11% year on year, and analysts expect prices to continue climbing. Even in Brazil’s domestic market, the cost of a bag delivered to the main consumer area of Sao Paulo increased by 19% from a year ago, according to data from University of Sao Paulo. “Global prices will continue to go up, and the uncertainty on Brazilian supply is one of the main reasons,” said Guilherme Morya, senior economic analyst for Rabobank.
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