Devaluation of the Real against the dollar, delays in Colombian coffee exports and the reduction in production in Vietnam and in the Brazilian stock are among the main causes for the higher price of coffee bags in the middle of the harvest in June 2021, when generally prices tend to fall due to the new harvest.
According to the Campo Futuro bulletin – prepared by the Confederation of Agriculture and Livestock of Brazil (CNA) in partnership with the Center for Intelligence in Management and Markets of the Federal University of Lavras (CIM/UFLA) – the commodity has shown consecutive price increases in Brazil, municipalities participating in the project since March 2021.
“The scenario of rising prices in the bag of coffee during the harvest is atypical. This usually does not happen because it is the time of greatest offer, but due to the circumstances of the current market, we are in this situation”, said the technical advisor of the CNA, Thiago Rodrigues. According to him, the main variables that define the prices of agricultural commodities are supply and demand, both in the spot market and in the future. In the case of Arabica coffee, the demand may be a consequence of the expectation of an increase in interest in consuming countries that have advanced in vaccination against Covid-19 and are already in the process of reopening.
In addition, the International Coffee Organization (ICO) considers that world consumption will grow by around 2.1 million 60 kg bags between the 2019/2020 and 2020/2021 harvests. In relation to supply, the dry climate in Minas Gerais and the negative bienniality of the coffee crop point to a reduction in production. With a stronger demand against supply, the possible shortage of the product puts pressure on the coffee industry to make acquisitions with the imminent possibility of even greater increases in future prices.
Source: Noticias Agrícolas