Coffee prices could remain “quite high” through 2022, according to Fitch Solutions, due to Vietnam’s Covid-19 lockout, which has limited global supplies.
The Southeast Asian nation exports the second-largest amount of coffee in the world. The country is dealing with its worst Covid epidemic since the outbreak began, and a lockdown in the country’s exporting powerhouse, Ho Chi Minh City, has hampered coffee and other goods shipping overseas.
According to customs data cited by Reuters, Vietnamese coffee exports declined 8.7% in August from July to 111,697 tonnes. According to the news agency, Vietnam sold 1.1 million tonnes of coffee between January and August, a 6.4 percent decrease from the previous year, although earnings from coffee exports increased by 2 percent to nearly $2 billion.
Global coffee prices have risen as a result of a drop in Vietnamese exports and production slumps in other major manufacturers. According to Refinitiv data, benchmark arabica coffee futures have risen 45.8% this year, while robusta futures have risen 52.2 percent.
Brazil, the world’s largest coffee grower, has been hit by frost and drought, causing crop damage. Colombia’s harvest was also hampered by bad weather, and the advent of the “mu” coronavirus type in the country could result in longer restrictions and labour shortages, worsening production, according to a research released last week by Fitch Solutions.
“At the same time, we believe that demand will increase up in the next months, at least in Europe and the United States, as the easing of Covid-19 restrictions should allow coffee cafes to reopen,” it added.
The average price of arabica coffee is expected to rise from $1.35 per pound to $1.60 per pound in 2021, according to the consultancy. It also increased its 2022 forecast from $1.25 per pound to $1.50 per pound.