Coffee Prices Soar Amid Ship Shortage

By Tatiana Freitas (Bloomberg) Coffee futures reached the highest in ten years in New York amid mounting concerns over tight supplies and space aboard ships.

Arabica prices have more than doubled over the past year following dry weather in Brazil, supply chain turmoil, and freight costs. To tackle short supply, roasters have tapped inventories and sent stockpiles monitored by the ICE Futures U.S. exchange to the lowest in 22 years.

The signs of tightening supplies are coming as global food costs continue to rise, recently nearing a record.

After reaching the lowest since February 2000, the stockpiles by ICE are likely to fall below 1 million bags, according to Alex Boughton, a coffee broker at Sucden Financial Ltd. That scenario could incite a sharp move to the upside, he said. On Wednesday, ICE reported stocks held at port warehouses monitored by the exchange declined for the 15th straight day to 1.035 million bags.

In another sign of tight supplies, Brazil’s green-coffee shipments fell 14% in January, with exporters group Cecafe’s president Nicolas Rueda saying lack of space in ships is still a big challenge for exporters. Stockpiles are low after a production drop last year, a condition that is likely to persist until the new crop arrives in the market, around May and June, he said.

Arabica futures rose 3.6% to settle at $2.5845 a pound in New York, the highest closing price since September 2011. In other soft commodities, raw sugar gained for a second day, while cocoa advanced.

The decline in the dollar index this month is affecting money flow and favoring soft commodities prices, according to Natalia Gandolphi, an analyst at HedgePoint Global Markets in Brazil.

By Tatiana Freitas and Áine Quinn © 2022 Bloomberg L.P.

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