Coffee importers stockpiling amid coronavirus constraints

A coffee shop in Bogota, Colombia. The country, a major coffee exporter, is in the midst of a 19-day national quarantine to help curb the spread of Covid-19. PHOTO: AGENCE FRANCE-PRESSE
A coffee shop in Bogota, Colombia. The country, a major coffee exporter, is in the midst of a 19-day national quarantine to help curb the spread of Covid-19. PHOTO: AGENCE FRANCE-PRESSE

NEW YORK • Coffee importers in some of the largest consuming countries are stockpiling, bringing forward orders by up to a month to avoid shortages should supply chains be disrupted by coronavirus lockdowns.

The pandemic has prompted governments around the world to impose severe curbs on movement in a bid to stem the spread of the virus. Supply chains are backing up as air freight capacity plunges and companies struggle to find enough truck drivers and shipping crews.

Coffee prices are higher on strong demand and expectations that supplies, which were tight even before the virus spread, will tighten further. Growers in major exporters Brazil and Colombia, among other countries, have seen prices rise.

"Everyone is trying to speed things up," said Mr Carlos de Valdenebro, Colombia country director for speciality exporter Caravela Coffee.

While Colombia is now between harvests, he said he was concerned about requests for faster shipments as most exporters that still have stocks in the country have temporarily cut operational capacity.

A major US coffee importer said American roasters were acting to also speed up deliveries from other origins, like Central America.

"We had requests from buyers in all major countries, the US, Japan, Germany," said the head of one of the largest coffee exporters in Brazil, the world's leading producer, asking not to be named. "Basically all the largest roasters in the world. They want to have the beans quicker, just in case."

Benchmark ICE arabica coffee futures are positive so far this month.

Europe and the United States are short of tens of thousands of freight containers, having received only a trickle from China during its coronavirus shutdown, while shippers are also struggling with quarantines at ports and crew shortages.

"Roasters and traders are stocking up because they anticipate supply disruption," said a London-based coffee trader, who said big roasters are buying spot cargoes, adding: "There are some (orders) I can't fulfil."

Prices in Brazil are close to record levels in local terms as well, nearing 550 reais (S$154) per 60kg bag. Farmers there tend to sell when prices go above 500 reais per bag.

Adding to roasters' concerns are reports that the virus could cause labour shortages that would hamper coffee harvesting in key regions such as Central and South America.

The Brazilian coffee exporter association Cecafe said shipments are normal for now, adding that shipping lines have advised that container shortages might occur in the coming months, when Brazil could harvest its biggest crop ever, around 70 million bags according to analysts.

Adding to roasters' concerns are reports that the virus could cause labour shortages that would hamper coffee harvesting in key regions such as Central and South America, where many coffee farms are yet to be mechanised.

Colombia, for instance, is in the midst of a 19-day national quarantine. Though farmers and their employers are exempted, moving and housing some 150,000 workers in sanitary conditions will be difficult, as will ensuring beans are being processed and shipped, said Mr Roberto Velez, the head of Colombia's growers' federation.

REUTERS

A version of this article appeared in the print edition of The Straits Times on March 31, 2020, with the headline 'Coffee importers stockpiling amid virus constraints'. Subscribe