A market report from the investment analysis firm Paragon Financial Limited suggests that coffee prices may soon begin to climb again as the expected record arabica harvest in Brazil may fall short of originally predicted levels.
“Brazil, home to roughly one-third of the world’s coffee beans, has been experiencing some major problems with their current harvest,” the firm said in a statement. “Brazil was expected to produce one of the largest crops of Arabica beans on record, and prices have dropped as much as 21 percent as a result. But recent dry weather has produced doubts about the Brazilian harvest. Government estimates of just over 50 million 60-kilogram bags fell under private estimates of 60 million bags.”
The report primarily focuses on the stock market ramifications of the world supply for large purchasers including Starbucks and Coffee Holding Co., but it also suggests that Brazilian sellers may try to withhold beans to drive coffee prices higher, as they are currently at 17-month lows.
“Farmers in Vietnam, the second largest producer, used the same tactic with successful results for their supplies of robusta beans,” the firm said. “Prices for robusta beans in London have gained 14 percent this year.”