Coffee price hike is coming! Global coffee production areas are limited

Affected by many factors, the global coffee production area and output have declined recently, and the coffee industries in Brazil and Vietnam have been particularly affected. In August, Brazil was affected by a cold wave, and the long-term drought and subsequent frost dealt a serious blow to Brazil's coffee planting and production .

Marco Antonio dos Santos, a meteorologist at the research institute Rural Clima, said that the growth cycle of coffee trees is at least two years, and the previous low temperatures have caused "very serious" damage to the branches of young coffee seedlings, which may affect the production outlook for 2022.

Climate experts believe that the La Nina phenomenon is the main cause of the recent drought in the Americas. According to data from the US Climate Prediction Center, the probability of La Nina occurring from August to October is 45%, from September to November is 55%, and from October to December is 62%.

The U.S. Department of Agriculture predicts that Brazil's coffee bean harvest may fall by nearly 20% in 2021 and 2022. The market is closely watching the changes in Brazil's weather. The meteorological department said the local rainy season is expected to start in early September, which is crucial for coffee trees that survive drought and frost damage.

Vietnam, as a major coffee producer, has also been hit hard by the severe epidemic in recent days. Since July, the epidemic situation in Vietnam has become more severe, and the strict travel ban ordered by the government has seriously hindered the transportation of Vietnamese coffee. Brazil's coffee production has declined, Vietnamese coffee transportation has been blocked, and the supply chain of the world's major coffee producing areas has been forced to be damaged .

Now we have entered the peak season, the shipping industry is busy, containers are hard to come by, freight rates continue to soar, and the increase in global transportation costs will also accelerate the rise in coffee bean prices. Last year, the price of coffee beans was about 104 cents per pound , while in July this year, the price of coffee rose by about 46% to 152 cents per pound !

The price of coffee beans has risen, but the demand has not decreased. In China, some companies said that in view of the current reduction in production in coffee producing areas, the market supply is tight, and it is difficult to find a container. The arrival time is uncertain, so they will increase the purchase of coffee beans. Traders plan to stock up some goods to meet market demand! With the reduction in supply and the surge in shipping costs, the price of coffee may rise in the near future !

Reduced supply

Shipping costs soar

Coffee price hike