They do not run easy times For coffee lovers. Not even cocoa. Both goods have seen how their prices They shot themselves until reaching Historical values Fruit of a “perfect storm” in which bad harvests and the imbalance between supply and demand are mixed. And although there is who predicts That by the end of the year we will see the occasional price drop (Arabica coffee), today the operators are not having it easy. In fact there are already some who, given the shortage of liquidity, are being seen With difficulties To move the merchandise.
It is the nth proof of how the sector is.
What happened? That the escalation in coffee and cocoa prices is noticing beyond costs, The demand either The accounts of the sector. A few days ago Bloomberg revealed How the rise in futures markets Of both products is depleting the liquidity of some operators, which is already reflected in their logistics. As? According to the agency, there are companies that are finding problems to finance international merchandise movements.
How does that affect the market? Bloomberg’s analysis is clear: to guarantee its position for the future and before the escalation of prices, there are operators who have had to mobilize great sums in the New York Stock Exchange. And that translates into a significant amount of cash blocked, which complicates financing the cargoes that transport grain from the production areas to the consumption points. As a backdrop are The difficulties with which it is part of the industry with the cash flow.
What is the problem? “The market in cash and the availability of financing”, Clarify Pam Thornton, with a long experience in the raw materials and cocoa market. To the lack of liquidity it is also added that, in a clearly upward market, some suppliers that have sold at lower prices are breaking their commitments. Another handicap that affects the coffee sector is the shortage of containers and the lack of incentives for reserves.
The situation is complicated because many companies sell at the same time with both products, coffee and cocoa, which leaves them in a difficult position when facing cash scarcity. An example aforementioned by Bloomberg herself is Olam Groupdedicated to both grains and that in just one year he has seen how his circulating capital shot 68%. The cause, as explained by the company: the “strong unprecedented increases” in the price of goods.
Did prices upload so much? Yes. Specialized platform graphics such as Investing either Training Economics or of one’s own World Bank They are eloquent. The futures of Arabica coffee and cocoa In New York they have descended in recent weeks, but they still remain high if the entire historical series is taken into account. The causes respond in both cases to a sum of factors, including bad harvests in producing areas such as Western Africa, Brazil or Vietnam.
In the specific case of cocoa prices 28% have fallen In 2025, but still the future negotiated in New York shot both last year that they remain at levels far higher than the average of the last decade. If we talk about coffee, They remain quite above of those of a year ago.
Are there more indicators? Yes. Last week Reuters warned of the complicated situation faced by world coffee trade. In his analysis he even speaks of “paralysis”, with merchants and toasters throwing the brake and reducing their activity to minimums due to the increase in prices.
“Normally we would be exhausted, but so far we have sold less than 30% of the production,” a manager of a manager of Elcafe ca does A few daysduring the Convention of the National Coffee Association of the US.
“The great price increase is eaten the liquidity of the customers. They do not have all the money to buy what they need,” he adds. There are already signals They point out that Arabica coffee could be reduced sensitively by the end of 2025, both for the behavior of the Brazilian harvest and the effect of prices on the demand itself, but for the moment the industry is forced to be conservative.
The footprint in the silos. Reuters points out another equally interesting effect: coffee stores close to US ports, which receive grain from the center or south of America, remain in half of their normal volume and in some cases they are even pretending them. “Some storage companies are returning the silos to the owners, canceling the rental contracts in advance,” Explain An executive of the sector.
Images | Kelsen Fernandes (UNSPLASH)
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