Coffee prices show atypical behavior and continue to rise in the market

Devaluation of the Real against the dollar, delays in Colombian coffee exports and the reduction in production in Vietnam and Brazilian stock are among the main causes for the higher price of coffee bags in the middle of the June 2021 harvest, a time 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 Management and Market Intelligence Center of the Federal University of Lavras (CIM/UFLA) –, the commodity has shown consecutive price increases in municipalities participating in the project since March 2021.

“The scenario of rising prices for coffee bags during the harvest is atypical. This normally does not happen because it is the time of greatest supply, but due to current market circumstances we are in this situation”, stated CNA technical advisor, Thiago Rodrigues.

According to him, the main variables that define agricultural commodity prices are supply and demand, both in the spot and future markets. 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.

Furthermore, 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 biannual nature of coffee cultivation point to a reduction in production. With stronger demand compared to 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.