Global coffee trade in crisis: sharp price increase threatens market stability

The global coffee trade is experiencing serious difficulties due to a sharp increase in coffee bean prices. Market participants report that they are reducing purchases to a minimum, as high prices threaten the stability of supplies and business relationships with retail chains. The increase in coffee costs is due to a decrease in production in leading producing countries, in particular in Brazil, which is one of the largest suppliers of this product to the world market.

According to Reuters, participants in the annual convention of the National Coffee Association of the United States in Houston were shocked by a sharp increase in coffee prices. Futures contracts for Arabica coffee on the ICE exchange, which is an important reference point for international trade, increased by 70%. This has become a serious challenge for all market participants.

Renan Chueyri, CEO of ELCAFE CA in Ecuador, said this year has been a special one for their instant coffee business. Usually, all production is sold by March, but this year the company has managed to sell less than 30% of its production. Chueyri attributes this to high prices, which are significantly reducing the financial capabilities of buyers.

The main reason for the sharp increase in prices is the reduction in coffee production in key growing regions. Brazil, as one of the largest coffee producers in the world, has faced problems that have affected the availability of beans. This is also reflected in the coffee trade, where many deals are concluded cautiously and buyers must physically check the quality of the products on site, which creates additional difficulties.

One of the main problems facing market participants is uncertainty about the stability of supplies. The CEO of one of the major American coffee roasters said that some of his customers are not sure whether they will be able to continue cooperation due to high prices and unstable supplies.

However, despite the challenges, countries that are traditionally large coffee suppliers, such as India, Uganda, Ethiopia and Brazil, are responding to high prices by expanding coffee plantations. This could lead to market shifts, with large companies with capital able to increase their trading volumes and smaller players finding themselves in a difficult position due to limited financing.