U.S. unroasted bean inventory slides to six-year low
Freight rates rise as Brazilian farmers ‘ship all they can’
By Marvin G. Perez
Arabica coffee futures rose, extending this year’s rally, as a global shortage of shipping containers leads to shrinking U.S. reserves.
Global supplies are tight because space is scarce on shipping containers that transport coffee beans from Brazil or Central America to the U.S. and Europe. As a result, the U.S. has been pulling from domestic stockpiles that plunged to a six-year low last month.
The shipping bottlenecks are especially acute in Brazil. Growers of all crops there, including sugar, soybeans and coffee are taking advantage of a weak real and “shipping all they can,” Christian Wolthers, the president of Wolthers Douque in Fort Lauderdale, Florida, said by telephone. That’s causing a surge in freight rates that’s “pinching everybody.”
In February, American green, unroasted bean inventory slid 8.3% from a year earlier to the smallest since June 2015, industry data showed Monday.
Besides the shipping snags, there are signs Brazilian deliveries sent to ICE Futures U.S. have started to plateau, with the bulk of last year’s record harvest already sold, bourse data showed.
The drop in U.S. reserves is partly caused by rebounding demand, Wolthers said.
Investors are showing they expect the out-of-home coffee market to rebound with vaccinations and massive government stimulus that’s fueling an economic recovery. Shares of Starbucks Corp., the biggest cafe chain, touched a recordhigh Tuesday and are up 91% in the past 12 months.
Arabica coffee for May delivery rose 1.4% to $1.3395 a pound in New York, after touching $.1356, highest for a most-active contract since Feb. 23. The price rose 4.3% in 2021 and is up 29% in the past year, supported by expectation for a much smaller crop in Brazil after drought curbed yield prospects. In other soft commodities, raw sugar and cotton also advanced on ICE. Cocoa fell.
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