Tight supply concerns likely to affect the cost of your morning coffee

Tight supply concerns are likely to affect the cost of coffee

The biggest producer and exporter of coffee, Brazil, is facing tight supply concerns resulting in a higher price of one of the most consumed beverages in the world, coffee. This week, coffee prices shot up by 4.50 percent higher this week. The prices have been moderating after hitting 10-year highs in the month of February.

However, most of the concerns have continued because of high input prices, the shipping container availability, and higher energy prices. Markets have seen some concerns arising out of Russia and Ukraine.

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The Chinese 2022 imports are expected to increase by 5 percent to nearly 4 billion bags. In Colombia, which is the second-largest producer of coffee, the March exports declined by nearly 13 percent. This means the inventories or the supplies haven't been gained, but the demand continues to be on the stronger side, resulting in increase in price.

The Russia- Ukraine demand is something that is concerning because Russia is a big coffee drinking nation and 1 million bags of decline in Russian demand is what the world is working with.

Vietnam exports have seen an increase of nearly 19 percent and the strengthening US dollar nearly at a two-year high is yet another thing that is keeping the prices in control right now.

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Meanwhile, in sense of Brazil's export, markets are anticipating 33.2 million bags in 2021-2022 versus 45.67 million bags in 2020-2021. So lower availability from Brazil is one of the major factors that has been supportive of prices. Closer home, India reported a growth of 42 percent in coffee exports in 2021-22.