There is a saying: When it rains, it pours, and when there’s a drought, prices go up.
In this case, the drought is in Brazil and it has the US running low on coffee. That means your morning cup of coffee is about to get more expensive.
The drought has decreased crop production just as congested shipping ports have caused US coffee stockpiles to hit the lowest they’ve been in six years. So far, roasters have been relying on their inventories instead of hiking prices, but that will only last so long and wholesale prices have climbed.
Potential losses from the drought could affect half of Brazil’s coffee crops next year.
Logistic problems have only compounded the shortage brought on by declining crops. Some facilities in Dinamo, Brazil stated that they don’t have enough containers to ship out coffee. Some containers and charter vessels aren’t currently available, resulting back ups and delays at shipping ports.
David Rennie, head of Nestle’s coffee brands stated it could take two to three years for take-away coffee to return to pre-Covid levels.
But coffee isn’t the only goods shortage hitting the global economy as it reopens this year.
But you know what they say, when it rains, it pours.
Nevertheless, assuming that this would not affect Malaysians as we import most of our coffee from China with a share of 25% (159 million US$) India with a share of 16.4% (101 million US$) Indonesia with a share of 15.3% (94 million US$).