US coffee supplies shrink and wholesale prices surge

Market braces for further fallout from global shortage of shipping containers

Coffee stockpiles have sunk to a six-year low in the US. Photograph: iStock

Coffee supplies in the US are shrinking and wholesale prices are surging, with the hard-hit market bracing for further fallout from a global shortage of shipping containers that’s upended the food trade.

Cafes and importers are facing tight supplies and higher costs because of a dearth of space on ship containers that transport beans from Brazil, the top exporter, and Central America.

For now, roasters are able to draw on inventories rather than raise prices, but with stockpiles sliding and a smaller Brazilian crop coming, the strains are expected to persist.

“Everybody is feeling the pinch,” said Christian Wolthers, the president of Wolthers Douque, an importer in Fort Lauderdale, Florida, who estimates that shipping costs have more than doubled from Latin America. “These bottlenecks are turning into a container nightmare.”

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Coffee stockpiles have sunk to a six-year low in the US even with Brazil’s record crop, and a large drop in output after a drought in the South American country is expected to shift the world balance to a deficit in coming months just as demand rebounds.

Arabica-coffee futures in New York rose about 24 per cent since the end of October following the damage to Brazilian groves. In February, American green, unroasted bean inventory slid 8.3 per cent from a year earlier to the smallest since 2015, industry data showed Monday.

The lower inventories mean less of a buffer to cushion the expected decline in Brazil’s crop, aggravating market tightness and lending continued support to prices, analysts say.

– Bloomberg