You may have noticed in the main stream media some talk of international shipping and production issues, we will look closely at current coffee, coffee futures and the two major growing countries.
As you are no doubt aware, Covid-19 is causing significant disruption, in particular global supply chains.
- Manufacturing lockdowns around the world are resulting in raw materials shortages, commodity prices increasing coffee, sugar, cocoa, milk powder & packaging materials.
- Port lockdowns and restrictions on ships entering ports causing shipping delays 8 & 12 weeks.
- Major global shortage of shipping containers causing delays as a result shipping costs have risen dramatically.
Brazil the world's largest producer of coffee beans is in drought, with a lack of rainfall in Brazil this is the worst dry spell in 91 years. The National Weather System (NWS) issued a water emergency alert for Brazil and said the rainfall deficit in Brazil is "severe" and that the future weather outlook shows most of Brazil's central region will receive little rain in June to September. Rural Clima said that damage to coffee trees from frost in Minas Gerais in June and July was "very significant" after parts of South Minas Gerais saw the coldest temperatures in 27 years.
The all-important flowering period for Brazilian coffee trees begins in this month, and a lack of rain may reduce coffee tree flowering and further curb coffee yields. Water availability in the soil in Minas Gerais is already at critical levels between 0% and 30% when the minimum level for crop development is 60%. The international coffee exchange has seen Brazilian arabica doubling in price in the last 12 months. One green coffee merchant on Wednesday cut its Brazil 2021/22 arabica coffee production estimate to 30.9 million bags from a previous forecast of 33 millon bags, the smallest crop output in 14 years.
Reduced coffee supplies from Colombia, the world's second-largest arabica producer, the Colombia Coffee Growers Federation reported Colombia August coffee production fell -16% year-on-yield to 915,000 bags, additionally in Colombia anti-government and workers' rights protests have kept beans stuck at ports, with prices spiking at 18% at origin the follow-on increases to destination is up 43%.
As the world re-opens -- including cafes and coffee shops -- more people are drinking more coffee, in particular with the northern part of the world predominately the United States and Europe going to its winter, demand is set to break records this year. So far, supermarkets have increased prices on their shelves and set to rise further in December 2021, we expect prices to begin to cool if Brazil’s coffee growing regions break its drought.
While we implemented numerous contingencies to mitigate the impact to our coffee partners during this time, there may be on-going service delays anticipated until recovery efforts conclude across the country.
We are committed to delivering your orders in full and on time, as a further precaution, we also ask that you place orders a little earlier than normal to avoid the possibility of any disappointment and order a little extra stock then you would normally order to ensure you have no disruptions to your business.
Stay Safe, Stay Caffeinated
Green Commodities Pty Ltd
King Carlos® Coffee