(Bloomberg) --
The recent price surge in coffee “should not be a reason for non-compliance with future deliveries, which have become a serious marketing problem that can even bankrupt cooperatives,” Roberto Velez, chief executive officer for the main grower group Fedecafe, told members.
NOTE: Coffee’s rally has raised concern that many growers will default on contracts previously signed at lower levels and will try to renegotiate them at a time when global demand rebounds
“The invitation is to invest in the prosperity of the coffee industry,” Velez said in a virtual meeting, according to an emailed statement
Current high prices caused by damaging frost in top producer Brazil and helped by a weak peso, “do not represent a bonanza, but an opportunity to save and invest”
NOTE: Colombia is the second-biggest arabica coffee supplier, and social and political unrest recently led to export disruptions
Arabica coffee futures have surged more than 80% in the past year, mostly driven by damage caused to Brazil’s 2021 and 2022 crops, first by drought and more recently by two frosts
In a recent trip to New York, Velez apologized to roasters and customers for the slowdown of exports caused by road and port blockages: statement
Federation warned that with more frosts expected this week in Brazil, “the global industry is very aware and waiting for what happens”
NOTE: Colombian peso tumbled 12% this year against the U.S. dollar, boosting returns in local currency on top of the price gains for futures in N.Y
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