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Coffee Prices on the Rise, But Sellers Aren’t Concerned … Yet

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Coffee Prices on the Rise, But Sellers Aren’t Concerned … Yet

time lapse photography of coffee on cup

Some coffee purveyors say they’re not too worried – at least in the short term – about the shipping container shortage that is pressuring already tight coffee supplies, the result of a South American drought that has decimated the Brazilian coffee crop.

Stockpiles of the aromatic bean are dwindling and wholesale prices are surging, the harbinger of price hikes that will push up the price of that cup of morning joe.

“In the short term, we likely won’t see any major changes as most large suppliers have pre-existing contracts that have not yet been fulfilled, Alex Mastin, CEO of Home Grounds, a New York specialty coffee operation specializing in black brews, told The Food Institute in an email.

“However, after these have been fulfilled, the cost of green beans is unavoidably going to rise and this is going to be passed onto to all levels of the supply chain. So local roasters, coffeeshops and end consumers buying a cup of coffee at their local cafe can all expect to pay a premium on their usual prices.”

IMPACT ON SPECIALTY BREWERS

Tom Saxon, founder of the U.K. subscription club Batch Coffee, told The Food Institute that, though supermarket grade coffee is likely to be affected in the short-term, specialty brewers likely will not experience any pressure for some time.

“The specialty coffee industry will not be affected short term as there is still a surplus of green coffee that would have been used in the coffee shops that have not been operating during COVID. Coming out of the pandemic will then result in larger specialty coffee chains seeking lower-grade arabica from other countries than Brazil,” Saxon said.

MAJOR FACTORS AT PLAY

Florida importer Wolthers Douque President Christian Wolthers told Bloomberg shipping costs from Latin America have more than doubled as a result of a shipping container shortage that is plaguing not only coffee, but other food commodities, as well.

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Arabica bean futures have risen 24% since October on the New York exchanges while U.S. unroasted, green bean inventories are down 8.3% from last year, Bloomberg reported. Marex Spectron estimates a 10.7 million bag shortage in 2021-22, up from an earlier 8 million-bag prediction amid rebounding demand.

Dinamo, one of Brazil’s largest coffee warehouse operators, said it has beans on hand, but no way to ship them because of the container shortage. Integrated Equipment Sales estimates there are 17 million shipping containers around the globe but only 6 million are in active use.

The English-language cable channel CGTN blames the container shortage on the pandemic, which left ports congested and low on personnel to offload ships. Meanwhile, the Freightos Baltic Index pegs the overall increased shipping costs up 165% from last year, Politico reported.

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