Coffee Supply and Demand

Coffee Supply and Demand

What are the latest insights into how coffee supply and demand is affecting prices currently? Coffee prices continue to be volatile. While prices in early May dropped a bit, June has seen a spike driving up; this is a level we have not seen since the February sell off, and the volatility continues.

In May, 2022, Brazilian exports were up +5.1% y/y (year-to-year) to 2.8 million bags, which may have helped to put some pressure on prices last month, and Vietnamese May coffee exports were up +9.3% y/y. Contrary, the Colombian Coffee Federation reported that Colombia’s Jan-May coffee production was down -4% y/y to 4.5 million bags and Guatemalan May coffee exports were down -15.3% y/y to 471,042 bags. These are some examples of ongoing coffee volatility that affects prices in the short term. The market reacts as prices push up and down, helping to exacerbate price volatility. 

Ultimately, the market should conform to basic supply and demand fundamentals. However, until supply chain challenges subside and inflation within global economies calms down, the coffee market will be subject to the aggressive volatility seen in all markets these days. For the coffee market, the biggest influencer is the weather in and amount of coffee Brazil can provide. As coffee from this current harvest continues to make its way to the world, we may find out soon if coffee prices will or will not stabilize. Inflation seems to be a major factor in all market dynamics, and coffee is no exception. High energy, materials, and labor costs, extreme increases in ocean transits, and a decrease in available labor has certainly helped to keep coffee prices elevated, as coffee producers, exporters, and importers face these rising costs worldwide.

In the meantime this summer, we wait and watch the market. In June, July, and August, the heart of new crops for many of our favorite origins from Central America to Africa arrive: Ethiopians, high-end single Estate Guatemalans, and Costa Rica Micro lots are knocking on the door. Chat with us M-F, or contact us directly, and we do our best to help you navigate this crazy market, and provide you with our best recommendations for your needs.

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