Like many industries looking to bounce back from the pandemic, coffee prices are high. The price-hike is caused by container shortages and port congestion, making the shipping of our favorite “magic drink” difficult.
During its annual conference on Friday, the Swiss Coffee Trade Association (SCTA) shared that the shipping problems are causing delays in moving supplies quick enough to meet the global demand of coffee. Prices climb as the issues persist. “When you have a global supply deficit, you will look for stock draws. High prices would boost transportation (of available coffee), but that is really not happening,” said Ben Clarkson, of Louis Dreyfus. “There are clearly risks of higher prices. The market is scrambling for some kind of equilibrium but has not found that yet,” Clarkson added.
How far behind?
It doesn’t sound like one of those “forever” type of things. Experts believe that the high prices will eventually boost production in countries and regions like Central America, Columbia, and Africa. Exports from popular locations like Brazil have been slowed due to bottlenecks. “We believe in a deficit of around four million bags, other analysts see it as high as seven million bags,” said Carlos Mera of Rabobank.
The re-balance of supply is going to take time, those experts maintain.