News of the recent Suez Canal blockage by a container ship caused delays for merchants. It was only a few days but the effects were visible as the passage is a major maritime trade route.
The effect had cost delays in shipment for oil and natural gas. The route carries over ten percent of the global trade.
A similar situation could happen to coffee, or more accurately, is happening right now.
For Starbucks, the problem with sourcing coffee is traceable to the pandemic. Port and harbor closure mandates by the government help limit the virus spread. These restrictions also limit product shipments.
One of the top exporters of coffee is Brazil. A combination of bad weather and the pandemic caused uncertainty in exports. Since October of last year, the pricing of coffee beans has increased by 24 percent. An 8 percent decrease in supply is observable in comparison to last year.
With stalled shipments and the Suez canal blockage, the coffee beans aren’t moving. These shipments will not arrive on time to their destination countries. Consumers will likely see an increase in the pricing of coffee. This is largely due to limitations in logistics.
It’s not only in Brazil that bad weather has affected coffee production. If Brazil had too hot of weather, heavy precipitation in Vietnam affected the harvest. Since 2020, coffee prices have reached the highest by February of this year.
Businesses relying on exports from Brazil will still expect increases in prices. The increase will continue until July or August. Meteorologists have predicted a generally cooler climate with a high chance for frost. The destructive cold will leave coffee farms frozen and no chances for harvest.
There’s still a chance for recovery. Climate experts are predicting the La Nina phenomenon to weaken. The change will stave off price increases. Farms can stockpile coffee during this “relief” period.
The increase in coffee consumption during the pandemic also affects global supply. According to a January 2021 report, there is a projected 1.3% global increase in production. This may limit the available coffee for businesses. The supplies should be enough for individuals.