As in all production chains, the end consumer started to feel in his pocket the increase of one of the most popular drinks in the world: coffee.
After rising in the spring, the prices of goods such as wood, corn and soybeans returned to normality. The coffee shop is moving in the opposite direction.
Coffee shipments from Brazil – the world’s largest coffee producer – are increasingly expensive and have reached their highest price in the last four years. Experts point out as the cause of adverse weather that has been felt in Brazil in recent months.
“Brazil is the largest coffee producer in the world,” he said Warren Patterson, director of strategy at ING, to CNN, recalling that the country was “hit by a severe drought this year”.
In July, the price of Arabica coffee – of higher quality – rose 10%, reaching its highest value in 7 years. This is the result of the severe frosts at the end of July, which strongly compromised the plantations.
According to information released by Quist Investimentos, exports of the product have increased, which results in a smaller offer in the domestic market, as informed by the Brazilian Coffee Industry Association (ABIC).
At the same time, shortages and rising prices for containers continue to shake up global supply chains and the world coffee supply is expected to tighten over the next two years, compressing the margins and increasing fears of inflation, warns the Bloomberg.
Second Douglas Duek, economist and CEO of Quist Investimentos, the climatic conditions – of a prolonged drought, with frost at the end – together with economic factors, result in a direct increase to the consumer. The expert also warns, in statements to the website Agro Link, that in September, for example, the total increase could be between 35% and 40%, the biggest increase in 25 years.
July frosts also pose a risk for the next harvests, which can keep prices high at the supermarket.
Duek points out as another major factor, the raw material cost, which also tends to become more scarce. “It will be a readaptation of the consumer, who is already dealing with other increases and will need to adjust to one more, which concerns something very present” in the lives of consumers, he adds.
The economist also points out that the accumulation of debts by the producer can happen due to all these events.
However, even with higher prices, “consumption will not decrease”, said the Rabobank analyst William Morya.
Prices would have to rise above 4 dollars (3.40 euros) per kilo to start making a difference in consumption, according to sterling smith, director of agricultural research at AgriSompo North America. “Until then, price-sensitive consumers can look for cheaper coffee or make more coffee at home,” he says. Bloomberg.
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