Coffee prices rise 4% as production marred by bad weather in Brazil, other countries - Zee Business analyst decodes

The cost of your morning hot beverage is likely to rise as the coffee prices are estimated to show a surge amid a mismatch on the demand and supply front at a global level, the Zee Business report said.

According to Zee Business senior research analyst Varun Dubey, “The prices of Coffee have jumped around 3-4 per cent on Monday, mainly due to the reports that production of coffee beans may be lower than expected."

Brazil, which is the biggest exporter of coffee, may see around a 36 per cent dip in the production of coffee due to bad weather/environment, Dubey pointed out.

A similar impact was also seen in the neighbouring country Colombia, where the production declined by 20-22 per cent in July 2022 on a Month-on-Month basis. The South American nation is the second largest producer in the world of Coffee Arabica beans.

Vietnam, which is the largest producer of Robusta Coffee beans, has also witnessed a 15-17 per cent slump in the overall export, Dubey mentioned.

On the back of these multiple reasons, the inventory of Coffee Arabica beans has touched a 23-year low, Zee Business research analyst stated.

“In 2022-23, the overall coffee production is expected to fall by 2.2 per cent and the demand will rise by 2-2.5 per cent. This will affect the demand and supply,” the analyst added.

Dubey said that Brazil reported scary numbers with respect to production and export and hence, the coffee price in global markets has risen, and its surge is likely to continue, going forward.

Tata Coffee and CCL Products are the two listed companies on the Indian stock exchanges that may have a direct impact on their shares price due to the rise in global coffee prices.  

Tata Coffee shares on Tuesday gained over 2.5 per cent to Rs 226 per share, while CCL Products shares surged nearly 4 per cent to Rs 466.5 per share on the BSE intraday.