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Brazil, the World’s Largest Coffee Producer, Is Facing Record Low Stockpiles

Demand for coffee is rising, but supply is being hit hard.

Coffee cup with beans Creative Commons

More and more people are waking up and jonesing for a cup of joe. That’s not a problem in and of itself—if you don’t take into consideration the attendant caffeine dependency—but it sure becomes one when the world’s coffee stockpiles are dwindling.

In Brazil, the largest coffee producer in the world, those stockpiles could reach a record low by next year, according to a new report from Bloomberg. By March, the country may have just 7 million bags of beans, said Silas Brasileiro, the president of the National Coffee Council. And globally, the arabica stockpiles in port warehouses monitored by the ICE Futures US exchange are at their lowest level in 23 years.

Coffee stockpiles “are so low that even if we have a good crop next year, Brazil may just barely have enough to serve demand,” Nelson Carvalhaes, a board member at an exporters group, told Bloomberg.

And that demand is increasing, making things even more difficult. This season, global consumption has grown 1.5 percent, on top of a 2 percent increase last year. That could mean another year of higher demand than supply, one analyst said.

To compensate, companies across the globe are raising prices. Starbucks and JDE Peet’s, one of the largest roasters in Europe, have both done so. And in Brazil, the cost of a bag delivered to Sao Paulo has increased 19 percent from just a year ago.

Last year’s growing season was marked by extreme weather, with wild fires and a deep frost both killing off coffee plants. Unfortunately, this year’s harvest hasn’t brought much relief to farmers. Cooxupe, the largest arabica-producing cooperative in Brazil, projected an 11 percent decrease in output compared with last season. And the upcoming weather conditions don’t seem to lend themselves well to optimism. The atmospheric phenomenon La Nina is wreaking havoc climate conditions. Brazil is expected to get more dryness, while Colombia—the second-largest coffee producer globally—is going to get too much rain. The coffee-producing nations of Guatemala, Honduras, Nicaragua and Vietnam also have poor outlooks ahead.

It’s news that might just send you back into bed—whether you’ve already had that cup of joe or not.

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