Freight & Frost Bite Down Coffee Production2 min read

August 11, 2021
climate change affecting coffee production paytm money blog

Freight & Frost Bite Down Coffee Production2 min read

Coffee soothes us, fuels us and cheers us. 

Be it a sunny day or a rainy day, a happy day or a gloomy day, a hectic Monday or a chill Sunday, coffee stands by us through thick or thin. Also, is there a better smell than a cup of freshly brewed coffee?

But did you know what’s happening to coffee around the world? World coffee prices recently touched a 7-year high in July. Why? Let’s find out!

What Is Happening In Brazil?

Brazil is the largest coffee producer, satisfying 1/3rd of the world’s coffee lovers. But Mother nature has taken quite an ugly turn for the Brazilian coffee farms. A drought earlier and now a powerful frost, back-to-back have ruined the already stressed arabia-coffee trees.

Coffee is a delicate plant which cannot bear harsh weather and eventually succumbs to it. There are signs of limited supply for at least the next 2 years.

What Else Is Increasing Coffee Prices?

And to add to the frost, the coffee industry has also got high transportation costs coupled with shipping container shortages looming over it’s head. 

COVID-19 has resulted in global shipping disruptions because there are lesser ships out in the sea right now that can’t cope up with the rising demand. Thus, transportation costs soaring. 

Silver Lining For Indian Exports?

With the world’s biggest coffee supplier taking a hit, other suppliers see a silver lining. And things seem pretty bright for the 3rd largest producer in Asia and 5th largest coffee exporter in the world i.e. India. 

India’s coffee exports are already 12% higher in 2020-2021 as per Coffee Board data. The 5 month period between January 1 and August 5 has seen a 10% increase in coffee exports compared to a year back. 

And European countries opening up shop bodes well for India with Italy, Germany and Belgium being the top 3 buyers of Indian coffee.

Would Coffee Lovers Abandon The Beverage?

Coffee is addictive, we all know. It is such an essential part of our daily routine that it is tough to let go of. A rather price-sticky commodity. 

Thus, whether prices are up or down, the demand would not see the wildest of swings, especially as the COVID-19 restrictions ease around the world. 

Fundamental Dose

Did you know that Tata Coffee and CCL Products touched all-time highs just a few days ago? Here’s a look at a few of the coffee stocks are performing.

coffee prices paytm money blog

Source – Market Data & Annual Reports

Interesting Read- Check out how rain affects stocks.

Disclaimer – This content is purely for informational purpose and in no way advice or a recommendation.