Top Grower Brazil’s Coffee Supplies Have Never Been Lower

Consider the following as evidence of how short the world’s coffee supplies have become: Brazil, the world’s largest producer, is on track to set a record low for its stockpiles.

According to Silas Brasileiro, president of the National Coffee Council, stockpiles in the South American nation may fall to just 7 million bags by March. According to analysts, a more comfortable level would be between 9 million and 12 million 60-kilogram bags.

In the context of persistent food inflation, Brazil’s supply woes resemble global scarcity and threaten to push up prices. Arabica stocks in port warehouses monitored by the ICE Futures US exchange are at their lowest level in twenty-three years.

According to the market research firm hEDGEpoint Global Markets, global demand continues to rise, with this season’s consumption up 1.5% after a 2% increase last year.

“Inventories are so low that even if we have a good harvest next year, Brazil may have just enough to meet demand,” said Nelson Carvalhaes, a member of the board of directors for the exporters group Cecafe. Rain is all that is required.

New York arabica coffee futures increased 11% year-over-year as a result of tight global supplies, and analysts expect prices to continue rising. Even on Brazil’s domestic market, the cost of delivering a bag to the primary consumer area of Sao Paulo rose by 19% compared to the previous year, according to data from the University of Sao Paulo.

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