The impact of rising coffee bean production costs on distributors
The price of Arabica coffee futures on the ICE Intercontinental Exchange in the United States last week hit the largest weekly increase in the past month, about 5%.
At the beginning of the week, frost warnings in Brazilian coffee-producing areas prompted coffee futures prices to jump at the opening. Fortunately, the frost did not affect the main producing areas. However, low market inventories triggered by frost warnings and concerns about possible coffee production cuts in Brazil next year have re-driven price increases.
Rabobank said the frost scare in Brazil earlier this week did not materialize in any significant way, but it was a strong reminder of depressed inventories. In addition to this, disappointing harvests in major producing countries and the looming implementation of EU anti-deforestation legislation are also bullish factors for the commodity.
With most of Brazil's harvest this year already completed, traders will now focus on weather conditions during the next two months of flowering. This is seen as an early sign of yields in the coming season, with farmers concerned about the potential for damaging premature flowering after some areas faced dry weather and high temperatures earlier this year.
The rising prices of coffee beans in the origin have caused us to think about how we, as distributors, should avoid the rise in raw materials causing our costs to fluctuate drastically. This has to mention the necessity of inventory. The inventory of coffee beans requires a good storage environment to prevent the coffee beans from getting damp and affecting the flavor. And the way each brand stores coffee beans is in customized coffee bags with brand logos. Therefore, it is very important to find a long-term strategic partner as a provider of coffee packaging.
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Post time: Aug-23-2024
