According to Silas Brasileiro, president of the national coffee council, stocks in the South American country could drop to 7 million bags by March, when in reality they should be 9-12 million bags.
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Low stocks in Brazil – a consequence of too little rain – are driving prices up, especially in combination with growing demand for coffee. Global demand increased by 2% last year, demand is expected to increase by 1.5% this year.
“Globally, prices will continue to rise and uncertainty about Brazilian inventories is a major reason for this,” said Rabobank analyst Guilherme Morya.
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Also, there aren’t many improvements to come. The weather forecast for the next few months – caused by the La Nina meteorological phenomenon – does not promise great improvements. While it is too dry in Brazil, Colombia, after Brazil’s largest coffee exporter, is struggling with too much rain for coffee farmers.
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Bad harvests also threaten Guatemala, Honduras, Nicaragua and Vietnam.
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See also: Paul D’Hoore: “We will feel inflation in everything”
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