Farmers Could Be Winners As Coffee Prices Spike And Countries Hoard During The Pandemic

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People need their caffeine fix — even if they’re in the middle of a global pandemic.

Fears over disruptions to supply chains amid the pandemic have led to some degree of hoarding among countries and consumers that’s given coffee prices a much-needed boost.

That’s good news for farmers in key coffee-producing regions, who have been struggling as coffee prices kept slumping for the past few years.

Since 2016, prices have dropped 30% below the average for the past decade, according to the International Coffee Organization, a body representing 49 member countries which export and import coffee. Arabica coffee prices in March were above $1.12 per pound, a far cry from the peak of over $3.00 per pound around 2011.

“Many of the 25 million farmers worldwide ... struggle to cover their operating costs as input prices continue to rise. Consequently, farm incomes decline and livelihoods are increasingly at risk,” the organization said in a report last week.

But prices of Arabica, the world’s most commonly produced coffee, rose last month due to concerns over its availability, said the ICO.

There is some evidence that countries are bringing forward coffee purchases on anticipation about future supply disruption.

Arabica coffee from Brazil, the world’s largest producer, jumped 10% in March as compared to February. Coffee futures traded in New York surged 8.8% in March, to an average of about $1.16 a pound. They climbed further to last settle at $1.2120 as of late Thursday during Asia hours.

By Weizhen Tan
April 20, 2020
Source and complete Article: CNBC.com