Reuters, LONDON, March 15 – Coffee traders are scrambling to reroute shipments destined for Russia and Ukraine as trade flows to the two countries deteriorate as a result of Western sanctions against Moscow and Kyiv’s decision to close its ports.
Russia ranks fourth in the world in terms of coffee imports, behind the European Union, the United States, and Japan.
“(Trade flows) have come to a grinding halt. In reality, these contracts will have to be cancelled. That is all there is to it “According to a coffee trader at a major international firm based in Geneva.
Russia and Ukraine together consume nearly 4% of the world’s coffee.
Both countries import a substantial amount of robusta coffee beans, which are frequently used to make instant coffee. The beans are a less expensive alternative to arabica, which has a smoother flavour.
The world’s largest container shipping lines, including the top three – MSC, Maersk, and CMA CGM – have suspended cargo shipments to and from Russia temporarily, while Ukraine’s ports have been closed since Russia invaded.
“While some shipping lines have stated that they will continue to ship to Russia, the devaluation of the rouble has effectively frozen that market. (Russian) roasters are unable to afford (to purchase), “According to a coffee trader at an international firm based in Europe.
Since the invasion, the rouble has lost more than 30% of its value against the dollar, and international roasters remaining in the country fear demand will collapse as local prices have roughly tripled.
“We anticipate a significant decline in consumption in (Russia and Ukraine). The war’s combined effect on demand and extremely high coffee prices will almost certainly result in a decline in demand “Rabobank stated in a statement.
A Geneva-based trader stated that he was unable to contact his Ukrainian buyers and was forced to make unilateral decisions regarding contract cancellations and shipment redirections.