Raw materials: “Coffee takes on water”

En 2022, French consumers received a hit on the coffee maker. At the supermarket checkout, they can only see the increase in pain. And coffee is not immune to inflationary pressure. Thus, in November, in a standard shopping cart, developed by the IRI research firm for The world, the price of a 250 g package of national-brand ground arabica reached 3.38 euros, which represents an increase of 19% over one year.

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In the spring, Giuseppe Lavazza, vice-president of the Italian roaster that bears his name, sounded the alarm. He had no hesitation in calling it “tsunami” the grain that was falling on the coffee market. He was then counting on an increase in shelf prices of between 8% and 10%. Already shaken by the crisis due to Covid-19, the coffee sector suffered the warning shot of the Brazilian weather in 2021. Affecting the world’s leading producer and exporter, a spring black frost caused the price of arabica to ignite . The harvest, cut by almost a quarter from the 2020 record, gave speculators food for thought.

Relative relaxation

In 2021, the pound of arabica, the most popular variety, was close to the bar of 2.50 dollars (2.40 euros) on the New York Stock Exchange, its highest level for ten years. It ended the year on a flight of almost 75% of its value. It took until October 2022 for investors to suddenly turn around and reverse the trend. Since then, the coffee has been leaking. Arabica is currently trading near $1.63 per pound, down 28% since January. Robusta follows a very similar trajectory.

To explain this relative relaxation, we must weigh the bags of grain. In Vietnam, the favorite land of the robusta variety, the current harvest promises to be plentiful, at 1.85 million tonnes. In Brazil, while the horizon is clearing up, not all the clouds have dissipated. The episodes of frost, but also of drought, have left their mark on the plantations. In its assessment, published at the end of September, the Brazilian institute Conab hopes that the national coffee harvest will exceed 50 million bags, a rebound of 5.6% over one year. But investors are also wondering about consumption. Will the coffee lover, under the pressure of inflation, sacrifice his little black coffee at the counter?

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