Consumers to start feeling pinch of global coffee shortage

Monday, 24 February, 2014

The predicted global coffee shortage has sparked panic buying, after fund buying led to the equivalent of the total global annual coffee production being traded in a five-day period last week.

In addition, origin producers have started withdrawing from the market, hoping to cash in on the higher future prices that have been predicted. Coffee bean prices have increased by more than 50% so far in 2014.

“The increase in coffee bean prices will have an immediate effect on spot prices for beans across the board, especially specialty varieties, with coffee bean prices this month alone increasing by 25%,” said Chris Togias, director of Griffiths Coffee.

Drought in Brazil - which has impacted Arabica bean crops - has pushed up the price of Arabica beans to the highest seen since October 2012 as concerns mount over the global supply.

Brazil has sustained coffee crop losses of 3 to 30%, and uncertainty remains over which crops can be revived by rain and which are beyond saving.

In 2013-14, Brazil produced 57.2 million bags; the year before, the country produced 56.8 million. The 2014-15 crop, however, has been predicted to hit just 51 million bags.

“With a 51 million-bag Brazil crop figure, our 2014-15 statistical balance becomes a deficit of around 5 million bags, coming after two years of statistical surplus in 2012-13 and 2013-14,” Volcafe wrote in a report. The country’s crop of Arabica beans has been hardest hit by conditions, decreasing from 40.7 million to 35 million bags, Bloomberg has reported.

Griffiths Coffee says the increase in bean prices will shortly flow through to consumers. “In the short term, prices should remain stable, but in the depths of winter as roasters’ forward contracts expire, a cup of coffee could increase upwards of 20 cents a cup,” Togias said.

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