Coffee prices have been increasing lately, not only this, they are also going volatile amid US Tariffs concerns and weather affecting the crop in key producing countries such as Brazil and Vietnam.
How are coffee prices affected by US tariffs and weather risks?
Notably, the imposition of US tariffs on coffee imports from Brazil has made it more expensive and harder to get. However, there is also a chance that coffee might be exempted from US Tariffs, creating chaos in the market.
Notably, Brazil, Vietnam, and India are the significant coffee producers. It is noteworthy that the weather in these countries, especially rainfall, affects the coffee production. Being too dry during the key flowering season (September to November), could hurt the next crop. Not only this, a super typhoon named Ragaasa may affect coffee crops in Vietnam, where harvesting starts soon.
According to the company called BMI ( Part of Fitch Solutions) Coffee prices have jumped 29.7% so far this year (up to September 15), more than the rise in price of other farm products.
What are the experts saying?
Praveen Kumar Kolimarla, a coffee trader, says that prices are increasing due to speculation. Some people thought there would be a shortage due to US tariffs and dry weather, hence prices increased. Then, there was a rumor that coffee might not be taxed, so people started selling, and prices dropped. He says the rain in Brazil isn’t a big issue yet. If it stays dry till November, then it’s a concern. Another issue is that certifiedstock levels (officially approved stored coffee) are falling. They used to be 1 million bags; now they are only 650,000 bags, which could cause a shortage.