Expert statements that problems with the coffee harvest in Latin America and Asia will lead to an increase in prices for this product in Russia by about 30% are rather speculative: there are no prerequisites for an increase in prices so far. This was announced to Izvestia by the head of the Roschaikofe association, Ramaz Chanturia, on Monday, August 29.
Earlier on the same day, RIA Novosti, citing the leading expert of the FoodNet working group of the National Technology Initiative (NTI) Mikhail Charny, reported that problems with the coffee harvest in Latin America and Asia had already affected its value in world markets, where the product will rise in price on 10–15%. The expert predicted a rise in prices in the Russian Federation by 30% – until the next harvest season in 2023. According to the specialist, drought and tree diseases have affected the harvest in these regions. Therefore, the center of coffee cultivation has moved to Vietnam, where the trees do not get sick yet.
Ramaz Chanturia noted that last week the cost of coffee exchange futures increased by about 15%, which became a “trigger” for some expert assessments. However, do not forget that the stock exchange is a financial and speculative instrument, there are often price fluctuations. Speculators often take advantage of these fluctuations to profit from rising or falling prices. At the same time, the exchange allows you to buy contracts that are executed in a few months and they are often purchased by those who have no real relationship with the market and are influenced by trends.
The head of the Roschaikofe Association stressed that the 15% increase in the cost of futures last week is still within the range of the price increase that occurred in 2021. The main increase in the price of coffee occurred last year, when Brazil experienced a drought and then frosts, which caused damage to a large number of coffee trees. This led to a two and a half times increase in the cost of green coffee in the summer of 2021, the expert emphasized. And at the beginning of 2022, many people mistakenly thought that the increase in coffee prices was due to the political situation, but this is not so: the increase in the cost of this product was associated with price increases due to climate problems in Brazil, the main supplier of coffee.
At the same time, current price fluctuations have not yet blocked their last year’s growth, the specialist added. He recalled that last year the price of coffee futures rose to $250 and dropped to $210. According to the London ICE exchange on August 29, the September coffee futures price is $240.5.
The rise in price of futures, which we see now, is not yet reflected in the real market and there is no certainty that experts’ forecasts for price increases will come true, the head of Roschaykofe emphasized.
Forecasts on prices can be built if their high level is fixed at least for a couple of months, he noted.
“Exchange prices of a high level begin to be reflected in the real market only after six months on average,” the specialist added.
At the end of May 2021, the cost of Arabica coffee rose to a 2016 high amid reduced supplies from Brazil and logistical problems in Colombia. The price of the July contract then reached $1.5 thousand per pound. Price fluctuations occurred throughout the year. Not only climatic conditions in Brazil led to a shortage of raw materials, but also showers in Colombia and India, the spread of coronavirus in Vietnam and the political crisis in Ethiopia, in the North of which hostilities are underway.