According to Silas Brasileiro, president of the national coffee council, stocks in the South American country could drop to 7 million bags by March, when in fact they should be 9 to 12 million bags.
The low stocks in Brazil – a result of too little rain – are causing prices to rise, especially in combination with a growing demand for coffee. Last year global demand increased by 2 percent, this year demand is expected to rise 1.5 percent.
“Globally, prices will continue to rise, and uncertainty about Brazilian inventories is one of the main reasons for this,” said Rabobank analyst Guilherme Morya.
Moreover, there is not much improvement to come. The weather forecast for the coming months – caused by the weather phenomenon La Nina – does not promise much improvement. While it is too dry in Brazil, Colombia, after Brazil the largest exporter of coffee, is struggling with too much rain for the coffee farmers.
Bad harvests also threaten in Guatemala, Honduras, Nicaragua and Vietnam.
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