I have not had enough time to study the global coffee prices situation of 2021. Based on what I’ve read recently, supply from Brazil and now Vietnam (major coffee producers) are affected enough to make a lot of news outfits worry (guess they love their coffee).
It seems Brazil’s continuing woes stem from drought followed by frost, both damaging for coffee crops especially with Arabica beans (which Brazil apparently is one of the largest producers globally). Vietnam’s crop, which has a lot of the weather-resistant robusta used for Instant Coffee, is fine but the problem in the country is supply chain disruption brought about by the surge of delta variant Covid-19 cases.
Now, some of you might not think a shortage of supply from these two countries should not worry you. You might think that there are other coffee producing countries anyway, but a significant drop in supply from these major players will increase global prices (I believe it actually already has). This is oversimplifying it (finance people love to make these things complicated) but without the usual production of beans from Brazil and Vietnam, coupled with the demand from consumers, means buyers will look elsewhere to buy their beans. Do these countries have the capacity to supply this increased demand from them? Most probably do not. What happens now? High demand means the highest bidders are able to snatch up the precious supply, or more simply, global coffee price goes up until the supply normalizes.
Will this mean our cups of coffee will double in price? Again, I have not studied this thoroughly, but it may not be immediate (unless you believe chain coffee shops won’t increase prices during the holiday season). Some major chains seem to have hedged their coffee supply prices for a few months (or until the end of the year hopefully), while I really cannot vouch for specialty roasters but their direct relationships with producers outside of Brazil may help. However, if this does not recover soon we might get pricier coffee not to mention (shudder) less coffee available for all of us.
If you are concerned about the price of our favorite beverage, then keeping abreast of this situation is a must. Honestly, if I had more time I would really try to dive into this.
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Categories: serious Kape, thoughts with kape
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