The International Coffee organization states the world's most-produced Arabica coffee prices have risen due to concern over its unavailability. Earlier this year, coffee futures trade in New York gushed 8.8%.
Due to the anticipated shortage of one majorly consumed drink in the current pandemic that has led to supply disturbance because of lockdown. But it turned out as good news for farmers in a central coffee-producing region struggling over slumping coffee prices and to cover even operating costs. Over the last few years, the prices have been dropped 30% below average since 2016, according to IOC.
Brazil, which happens to be the leading producer of Arabica coffee, prices jumped 10% in March in comparison to its previous month.
Later in April, coffee farmers in South America have been struggling to source Arabica to meet the orders from the west. Britain also could face a shortage as a result of supply chain disturbance around the world.
It is anticipated that current demand will exceed production, causing disruptions to supply chains. In harvesting as well as in shipping, that might lead to a temporary shortage. Colombia, another significant exporter of coffee, could also be affected in the current situations as its harvest in April, is likely to be too influenced due to fewer migrant laborers from nearby countries. Various countries have stopped exports of some crops, started stockpiling food supplies, including coffee. Another risk for coffee production is the locust invasion from Africa.
As far as the restrictive movement of seasonal workers is concerned, Vietnam, where coffee trading is limited due to lockdown and Central America, is currently in the off-season, also in farms across Brazil, Colombia & Peru that accounts for almost 2/3 of world output.
The alternate scenario will happen for farmers if demand comes down when people continue to stay home for an extended period, and coffee shops remain closed as rules implemented by many countries to operate them for limited hours, restrictive public gatherings might lead to dropping in consumption as due to isolation out-of-home intake in some markets had declined.
Even after the above-stated reasons, coffee consumption has not completely contracted, and it has accelerated trends from online buying. But due to delays in shipment, labor shortage, lack of container space, and social distancing, the scope for expectancy is limited as the effect of inter-country lockdown will have on the coffee production and trade is undetermined and differ from country to country.