Insightful Word
  • Investing
  • Stock
  • Economy
  • Politics
  • Investing
  • Stock
  • Economy
  • Politics
No Result
View All Result
Insightful Word
No Result
View All Result
Home Investing

Global coffee crisis brews as soaring prices disrupt supply chains and rattle industry

admin by admin
March 8, 2025
in Investing
0
Global coffee crisis brews as soaring prices disrupt supply chains and rattle industry
0
SHARES
3
VIEWS
Share on FacebookShare on Twitter

The global coffee trade is facing an unprecedented crisis as soaring prices disrupt supply chains and force roasters to scale back purchases.

A 70% surge in Arabica coffee futures since November has left traders, roasters, and retailers grappling with uncertainty, with buyers unwilling to commit to large orders.

The situation has prompted major players to rethink their strategies as coffee warehouses remain understocked, and negotiations with retailers stall.

At the US National Coffee Association’s annual convention in Houston this week, traders and roasters warned that the supply crunch could have lasting consequences for the industry.

While higher prices typically indicate profitability for coffee producers, this time, buyers are reluctant to absorb costs, limiting the flow of coffee through supply chains.

Industry leaders now face difficult choices as they weigh the impact of prolonged volatility on global coffee markets.

Retailers push back as roasters cut purchases

Coffee roasters worldwide are reducing their purchasing volumes, with some unable to sell their expected annual production.

Renan Chueiri, director general at Ecuador’s ELCAFE C.A., noted that his company has only sold 30% of its projected output this year—an unprecedented situation.

Many buyers, he said, are struggling with liquidity and cannot afford to buy at current prices.

Retailers are also resisting price increases, making it difficult for roasters to pass on higher costs. Some supermarkets and grocery stores are delaying negotiations, leading to shortages on shelves.

A US-based roasting executive said some of his clients fear they will be unable to sell coffee at the new prices, forcing them to reconsider their business models.

In response to the crisis, traders are adopting cautious strategies.

Deals in Brazil, the world’s top coffee producer, are now conducted under stricter terms.

Buyers only pay after verifying the quality of the beans on-site, a shift that underscores the heightened risk in the market.

This conservative approach has slowed transactions and further strained cash flows across the supply chain.

Supply shortages force warehouse closures

The supply squeeze is evident at major coffee storage hubs in the US, where warehouses near ports are operating at half their usual capacity.

An executive from one of the largest storage firms noted that some companies are returning silos to their owners and terminating leasing agreements early due to the lack of stock. This signals a severe supply crunch that could persist unless production rebounds significantly.

As smaller traders struggle with financing constraints, industry consolidation is accelerating. Larger firms with deeper capital reserves are poised to expand their market share, while smaller businesses may be forced out of the industry.

Michael Von Luehrte, owner of broker MVLcoffee, expects trading firms with greater financial resources to increase their volumes, while those with limited access to credit could struggle to stay afloat.

Brazil’s harvest could end the price rally

Despite the current crisis, some analysts predict that Arabica prices may fall by 30% by the end of the year.

A recent Reuters poll suggests that demand destruction due to high prices and a potentially strong Brazilian harvest in 2025 could stabilise the market.

The expansion of coffee plantations in Brazil, India, Uganda, and Ethiopia may further contribute to a supply recovery, potentially reversing the price surge.

Commodities trader Louis Dreyfus highlighted that an abundant harvest in Brazil, combined with new planting efforts, could lead to a price collapse.

However, this depends on favourable weather conditions and sustained investment in coffee-growing regions.

The post Global coffee crisis brews as soaring prices disrupt supply chains and rattle industry appeared first on Invezz

Previous Post

Why did Saudi Arabia cut April oil prices for Asia?

Next Post

How billionaire Caltagirone could influence Italy’s banking M&A wave

admin

admin

Next Post
How billionaire Caltagirone could influence Italy’s banking M&A wave

How billionaire Caltagirone could influence Italy’s banking M&A wave

Trending News

Cisco expected to benefit from improving campus switching market, Citi says

Cisco expected to benefit from improving campus switching market, Citi says

January 17, 2025
Detroit Three automakers face profit wipeout risk from proposed Trump tariffs

Detroit Three automakers face profit wipeout risk from proposed Trump tariffs

November 27, 2024
Meta faces trial in October on unfair competition case lodged by Spanish media

Meta faces trial in October on unfair competition case lodged by Spanish media

November 29, 2024
Subscribe to Insightful Word


    Recent News

    China’s May export growth seen slowing to 5.0% amid trade uncertainty: Reuters poll

    China’s May export growth seen slowing to 5.0% amid trade uncertainty: Reuters poll

    June 6, 2025
    FTSE 100 Index shares of 2025: Rolls-Royce, Fresnillo, BAE, and more

    FTSE 100 Index shares of 2025: Rolls-Royce, Fresnillo, BAE, and more

    June 6, 2025
    Asian stocks end mixed: Hang Seng snaps winning streak, Nikkei jumps 0.5%

    Asian stocks end mixed: Hang Seng snaps winning streak, Nikkei jumps 0.5%

    June 6, 2025
    Starlink reportedly secures key licence in India, moves closer to launching services

    Starlink reportedly secures key licence in India, moves closer to launching services

    June 6, 2025

    Recent News

    China’s May export growth seen slowing to 5.0% amid trade uncertainty: Reuters poll

    China’s May export growth seen slowing to 5.0% amid trade uncertainty: Reuters poll

    June 6, 2025
    FTSE 100 Index shares of 2025: Rolls-Royce, Fresnillo, BAE, and more

    FTSE 100 Index shares of 2025: Rolls-Royce, Fresnillo, BAE, and more

    June 6, 2025

    Latest News

    • China’s May export growth seen slowing to 5.0% amid trade uncertainty: Reuters poll
    • FTSE 100 Index shares of 2025: Rolls-Royce, Fresnillo, BAE, and more
    • Asian stocks end mixed: Hang Seng snaps winning streak, Nikkei jumps 0.5%

    About Insightful Word

    • Contacts
    • Cookie Notice
    • Privacy Policy
    • Terms of Service
    • Trading tools
    • Contacts
    • Cookie Notice
    • Privacy Policy
    • Terms of Service
    • Trading tools

    Copyright © 2025 Insightfulword.com. All Rights Reserved.

    No Result
    View All Result
    • Investing
    • Stock
    • Economy
    • Politics

    Copyright © 2025 Insightfulword.com. All Rights Reserved.