On Thursday, US coffee prices were on a bullish track as farmers grappled with the global fertilizer shortage driven by the Ukraine-Russia war.
The US coffee C futures for May 22 delivery increased by 3.19% or 6.88 points to $222.58 per metric ton.
Consequently, the world’s benchmark for Arabica beans followed its Wednesday’s upturn of 0.54% to $215.70 per metric ton.
Brazil, the leading coffee producer, purchases the highest amount of fertilizer globally. Its top supplier is Moscow, accounting for 22.00% of the country’s imports.
The ongoing geopolitical conflict halted significant trade routes, triggering fears of fertilizer shortage.
Eventually, farmers currently lower their fertilizer purchases in Nicaragua just to make ends meet. Likewise, growers in Guatemala diluted nutrients to stretch their scarce supplies.
Meanwhile, Costa Rican producers bet that their soil holds enough lingering supplements up to the next planting season.
Correspondingly, the smaller export of the soil minerals could lead to a shortfall of coffee. In line with this, analysts expected the price of the soft commodity to step higher in the near term.
Before the invasion, Brazilian authorities even tried to negotiate a deal with Russia to secure supplies.
Coffee is an essential agricultural product in North America. The United States imports 24.00% of its beans from the region.
Accordingly, small-scale farmers around the world’s richest producing areas struggled to find alternatives to counter mounting fertilizer costs.
Several growers consider organic waste as a cheap substitute, but this could significantly reduce yields.
In addition to the bullish outlook, the International Coffee Organization recently cut its global 2020/21 supply estimate.
The ICO expects a deficit of 3.13 million bags, compared to the previous projection of a 1.20 million surplus.
Brazil’s top coffee exporter sees record shipments
Meanwhile, Brazil’s leading coffee exporter forecasted that arabica-bean shipments would hit a record high this year.
Cooxupe projected its exports to surge 20.00% to 5.90 million bags as the previous logistic snarls ease.
The cooperative’s harvest will be at the same level this year. Nevertheless, it plans to raise shipments using stockpiles and coffee purchased outside of the organization.
At the same time, Cooxupe mentioned that crops are in good shape for next year’s collection. He also added that the recent rains had bolstered vegetative development in the region.
However, the current crop will bear the impact of the severe drought last year. Still, the cooperative said Brazil’s coffee output might be slightly higher than in 2021.
COMMENTS