Brazilian coffee stocks near record low

Coffee stocks in Brazil, the world’s largest producer, are approaching an all-time low.

According to Silas Brasileiro, president of the National Coffee Council, quoted by Bloomberg, by March, stocks of coffee in this South American country may be reduced to 7 million bags. According to analysts, the standard level is between 9 million and 12 million 60 kilogram bags.

Brazil’s supply woes are echoing global shortages, threatening to push prices higher amid persistent food inflation. Arabica stocks in port warehouses, controlled by US exchange ICE Futures, are at their lowest level in 23 years. Meanwhile, global demand continues to rise: According to research firm hEDGEpoint Global Markets, global coffee consumption is up 1.5 percent this season, after rising 2 percent last year.

“Stocks are so low that even if we have a good harvest next year, coffee in Brazil may barely be enough to meet demand,” said Nelson Carvalhaes, board member of the exporting group Cecafe. “We just need rain.” Weather patterns triggered by the natural La Niña event are expected to continue over the next few months, leading to more drought in Brazil and too much rain in Colombia, the world’s second largest producer of coffee. Unfavorable weather could also affect crops in Guatemala, Honduras and Nicaragua. Brazil’s largest Arabica cooperative, Cooxupe, is forecasting an 11 percent drop in production from the previous season.

Shortfalls in global inventories have sent New York Arabica coffee futures up 11 percent year on year, with analysts expecting prices to continue rising. Even in Brazil’s domestic market, the cost of a bag of coffee delivered to Sao Paulo’s main consumer area has risen by 19 percent compared to last year, according to the University of São Paulo.

Source: Российская газета by

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