Coffee prices fall rapidly in the global market

The high price volatility experienced in the global coffee industry in the recent period has entered a significant correction phase, alongside increases in harvests seen in leading producer countries. In particular, increased rainfall and improving climate conditions in Brazil and Vietnam have mitigated the effects of the drought seen in recent years, causing activity in the futures markets.

Analysts state that the retreat of coffee contracts on the New York Stock Exchange to levels around 265 dollars per pound sends a message that the supply-demand balance in the market is being re-established.

While it is stated that this rapid decline of approximately 30 percent in prices has eased raw material costs, it is noted that this retreat has not yet been fully reflected on shelves in spot markets.

The most fundamental reason for this sharp decline in prices in the global market is the near-record increases seen in the new season production reports announced in South America. The double-digit growth in coffee production, especially in the Arabica variety, encouraged funds to gradually withdraw from the market. Experts point out that the volatility experienced recently is fundamentally caused by expectations of a supply surplus.

On the other hand, according to technical evaluations made by financial institutions, prices in futures transactions continue to test critical levels in the 245-265 dollar per pound band. Even if reaction buying is observed in the short term following the rapid price decline, it is emphasized that the trend is downward in the long term. Signs in technical indicators suggest that the current correction reflects a structural change.

Despite this price retreat worldwide, the expected price drop for the end consumer is delayed. The reasons for this are cited as ongoing geopolitical tensions on international shipping routes, the shortage of containers at ports, and the persistent high level of freight costs. While it is stated that costs are on an upward trend in coffee roasting factories and chain stores, industry representatives argue that for a permanent relief in consumer prices, not only market prices but also disruptions in the supply chain must be resolved.

News Source: 12punto