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the impact of the reduction is likely to continue The impact of constantly tight global supply
to affect production for crop 2023/24 season. chains on coffee market
Brazil’s weather is crucial to the growth of coffee
An unsettled year: a look back at the trees. Adequate rainfall is important for the At the end of 2021, global supply chains
coffee market in 2021 growth of coffee berries, otherwise, it will fur- continued to be challenging, expensive freight
ther tighten the global coffee supply chain. The rates have discouraged buyers, and the shortage
According to an update from Bloomberg, adverse climatic conditions also had a large neg- of containers was a shared problem among major
coffee prices have already been reaching decade ative impact on Colombia, the second largest coffee exporting countries including Brazil,
highs at a time when food inflation is gripping Arabica coffee producer. The excessive rainfall causing a large backlog of stranded coffee at
the globe. The drop in certified stocks at desti- in Colombia, which lasted from the beginning of ports. The goods did not reach their destinations
nation has drawn attention from the coffee October until the peak of the harvest, had sig- as expected and led to the continuous reduction
market, as it reached a new 20-year low. The era nificant effects on the harvest, and reduced of the exchange certified Arabica coffee inven-
of expensive coffee is not going to end any time production by nearly 1.24 million bags, thus, the tory; supply chain tension forced roasters to
soon. According to data released by the ICE final output could only be maintained at 12.03 build buffer stocks, and the semi-washed Brazil
Futures Exchange, Arabica coffee is just in de- million bags, which will be the lowest output in coffee was also sent to the exchange for cupping
mand for freshly ground coffee shops and coffee Colombia in the past decade. According to inter- and storage. Rainfall in Brazil’s largest Arabica
chains. Certified coffee stock at exchange ter- nal information, the total global coffee produc- growing region at the end of February was well
minal has been falling since September due to tion in the 2021/2022 production season can only below seasonal standards in previous years, fu-
soaring shipping costs and unfavorable weather be maintained at around 162 million bags (60KG/ eling concerns about Brazil’s coffee production
that clipped production in Brazil, the world’s bag), which is about 9.736 million tons of green and sending market prices to a decade high. The
largest grower and exporter. Shrinking certified coffee beans, when it was around 182 million certified inventory on the ICE Arabica coffee
stock has become a concern because countries bags (60KG/bag), about 109.58 million tons of futures market also fell to its lowest level in 20
tap them when they aren’t getting enough coffee green coffee beans in 2020/2021. years, which was below one million bags.
supply from the origins. It’s a sign that demand
is outstripping supply, with one of the conse-
quences being the rising prices.
Unprecedented new challenges for
coffee supply chains

Harsh climates reduce production in major
production origins

As we all know, anything that happens in
Brazil would affect the international coffee mar-
ket. As the world’s largest coffee-producing area,
Brazil’s Arabica coffee production accounts for
more than 40 percent of the world’s total Arabi-
ca coffee production. In 2021, Brazil encountered
a once in a century drought, causing serious
damage to many agricultural products. The severe
droughts in the Arabica coffee-producing regions
followed by a frost has become a key driving
factor in the ICE Arabica futures market. Accord-
ing to Volcafe’s latest quarterly report, Brazil’s
production for the 2022/2023 crop year is fore-
cast to be 37.5 million bags (60KG/bag) while
Brazil’s production for the 2021/22 crop year
was 53 million bags (60KG/bag). On top of that,

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