Global coffee traders and roasters say they have slashed their purchases to minimal levels, as the industry reels from a steep surge in prices that suppliers have yet to convince retail stores to accept.
At the U.S. National Coffee Association annual convention in Houston this week, attendees said they have been in shock at a 70% increase since November for Arabica coffee futures on the ICE exchange, the benchmark for coffee deals around the world.
Renan Chueiri, director general at ELCAFE C.A. in Ecuador, said this year is the first time the instant coffee maker hasn’t sold all of its expected annual production by March.
“We would usually be sold out by now, but so far we sold less than 30% of production,” he said. “The big price increase eats clients’ cash flow, they don’t have all the money to buy what they need.”
The coffee price hikes have stemmed from lower production in important coffee growing regions, particularly in top grower Brazil, reducing the availability of beans.
“Nobody wants to be exposed, nobody is buying for future delivery, it is all hand to mouth,” said one coffee broker, asking not to be identified due to the sensitivity of the issue.
By “hand to mouth”, he was referring to the practice of buying only what is necessary for the moment and eschewing stockpiling.
Many recent deals in Brazil, he said, have been conducted in a very conservative manner.