Tyr-Ziu Saxnot
03-23-2021, 09:18 PM
https://www.msn.com/en-us/money/other/the-world-is-facing-a-coffee-deficit-in-supply-chain-nightmare/ar-BB1eTawx?ocid=msedgdhp
Bloomberg
Bloomberg
The World Is Facing a Coffee Deficit in Supply Chain ‘Nightmare’
Marvin G. Perez, Fabiana Batista and Manisha Jha - Yesterday 4:22 PM
The World Is Facing a Coffee Deficit in Supply Chain ‘Nightmare’
(Bloomberg) -- Coffee supplies in the U.S. are shrinking and wholesale prices are surging, with the hard-hit market bracing for further fallout from a global shortage of shipping containers that’s upended the food trade.
Coffee stockpiles have sunk to a six-year low in the U.S. even with Brazil’s record crop, and a large drop in output after a drought in the South American country is expected to shift the world balance to a deficit in coming months just as demand rebounds.
“Everybody is feeling the pinch,” said Christian Wolthers, the president of Wolthers Douque, an importer in Fort Lauderdale, Florida, who estimates that shipping costs have more than doubled from Latin America. “These bottlenecks are turning into a container nightmare.”
While cargo-market disruptions have played havoc the global food trade generally, the problems in the coffee market show food inflation already on the rise could be exacerbated as economies reopen. For now, roasters are able to draw on inventories rather than raise prices, but with stockpiles sliding and a smaller Brazilian crop coming, the strains are expected to persist.
Arabica-coffee futures in New York have risen about 24% since the end of October following the damage to Brazilian groves. In February, American green, unroasted bean inventory slid 8.3% from a year earlier to the smallest since 2015, industry data showed Monday.
U.S. green-coffee inventory slides to lowest in six years
© Bloomberg
U.S. green-coffee inventory slides to lowest in six years
The lower inventories mean less of a buffer to cushion the expected decline in Brazil’s crop, aggravating market tightness and lending continued support to prices, analysts say.
Marex Spectron this month increased its estimate for a global coffee deficit to 10.7 million bags in 2021-22, compared with its previous projection of 8 million bags, citing lower Brazilian arabica output after adverse weather damaged crops. Goldman Sachs Group Inc. said in a report that if production in Central America doesn’t improve in coming years, the market will enter a structural deficit given the rebound in demand.
Coffee Operations In The Largest Coffee-Growing State In Brazil
© Bloomberg
Coffee Operations In The Largest Coffee-Growing State In Brazil
Sacks of coffee beans ready for export at Dinamo’s facility in Machado, in 2018.
In the facilities of Dinamo, one of Brazil’s largest coffee warehouses operators, there’s a lot of product stuck waiting for containers. In the company’s unit in Machado municipality, in the coffee heartland of Minas Gerais, beans are awaiting the arrival of 18 empty containers, said Luiz Alberto Azevedo Levy Jr., a director at Dinamo. “These containers will probably take about 15 more days to get here amid bottlenecks at the port,” he said.
The situation, which got even more dire in March, will probably reduce the volume of coffee exported by Brazil, Levy Jr. said.
“Logistics have been a headache, dealing with lack of space and containers,” said Marco Figueiredo, trader and partner at the Florida-based Ally Coffee, a specialty coffee merchant that imports beans from countries including Colombia, Guatemala, and Brazil. “We are monitoring the situation and talking to clients, making them aware of the rising costs.”
A word to the prudent and the wise.
If coffee is your thing. If it is important to you to have that cup or two each morn.
Then you would be wise to stock up heavily right now.
As there is about to come around a shortage of the hot brew.
Your morning cup of Joe may be missing soon..
Investing in a 4 or 5 or even 6 month supply might not be a bad idea..-Tyr
Bloomberg
Bloomberg
The World Is Facing a Coffee Deficit in Supply Chain ‘Nightmare’
Marvin G. Perez, Fabiana Batista and Manisha Jha - Yesterday 4:22 PM
The World Is Facing a Coffee Deficit in Supply Chain ‘Nightmare’
(Bloomberg) -- Coffee supplies in the U.S. are shrinking and wholesale prices are surging, with the hard-hit market bracing for further fallout from a global shortage of shipping containers that’s upended the food trade.
Coffee stockpiles have sunk to a six-year low in the U.S. even with Brazil’s record crop, and a large drop in output after a drought in the South American country is expected to shift the world balance to a deficit in coming months just as demand rebounds.
“Everybody is feeling the pinch,” said Christian Wolthers, the president of Wolthers Douque, an importer in Fort Lauderdale, Florida, who estimates that shipping costs have more than doubled from Latin America. “These bottlenecks are turning into a container nightmare.”
While cargo-market disruptions have played havoc the global food trade generally, the problems in the coffee market show food inflation already on the rise could be exacerbated as economies reopen. For now, roasters are able to draw on inventories rather than raise prices, but with stockpiles sliding and a smaller Brazilian crop coming, the strains are expected to persist.
Arabica-coffee futures in New York have risen about 24% since the end of October following the damage to Brazilian groves. In February, American green, unroasted bean inventory slid 8.3% from a year earlier to the smallest since 2015, industry data showed Monday.
U.S. green-coffee inventory slides to lowest in six years
© Bloomberg
U.S. green-coffee inventory slides to lowest in six years
The lower inventories mean less of a buffer to cushion the expected decline in Brazil’s crop, aggravating market tightness and lending continued support to prices, analysts say.
Marex Spectron this month increased its estimate for a global coffee deficit to 10.7 million bags in 2021-22, compared with its previous projection of 8 million bags, citing lower Brazilian arabica output after adverse weather damaged crops. Goldman Sachs Group Inc. said in a report that if production in Central America doesn’t improve in coming years, the market will enter a structural deficit given the rebound in demand.
Coffee Operations In The Largest Coffee-Growing State In Brazil
© Bloomberg
Coffee Operations In The Largest Coffee-Growing State In Brazil
Sacks of coffee beans ready for export at Dinamo’s facility in Machado, in 2018.
In the facilities of Dinamo, one of Brazil’s largest coffee warehouses operators, there’s a lot of product stuck waiting for containers. In the company’s unit in Machado municipality, in the coffee heartland of Minas Gerais, beans are awaiting the arrival of 18 empty containers, said Luiz Alberto Azevedo Levy Jr., a director at Dinamo. “These containers will probably take about 15 more days to get here amid bottlenecks at the port,” he said.
The situation, which got even more dire in March, will probably reduce the volume of coffee exported by Brazil, Levy Jr. said.
“Logistics have been a headache, dealing with lack of space and containers,” said Marco Figueiredo, trader and partner at the Florida-based Ally Coffee, a specialty coffee merchant that imports beans from countries including Colombia, Guatemala, and Brazil. “We are monitoring the situation and talking to clients, making them aware of the rising costs.”
A word to the prudent and the wise.
If coffee is your thing. If it is important to you to have that cup or two each morn.
Then you would be wise to stock up heavily right now.
As there is about to come around a shortage of the hot brew.
Your morning cup of Joe may be missing soon..
Investing in a 4 or 5 or even 6 month supply might not be a bad idea..-Tyr