Due to the inclement weather in the two major producing countries, the global coffee market is expecting another jump in prices. Brazil, which is a major manufacturer and exporter of coffee, is suffering from drought, and Vietnam, which ranks second in production, - from the incessant rains. This significant decline in production is against the background of growing demand.
The rising cost is due to drought in several regions of Brazil – world’s largest producer and exporter of coffee. Adverse weather conditions have caused that the Robusta crop in 2016 was the smallest in the past decade. Last year, Robusta futures increased in price to 50%, while arabica coffee futures rose by 8.2%.
This year, in the Brazilian Espírito Santo state, where the largest number of coffee plantations in the country is situated, there was no rain for about a month, and the government imposed restrictions on irrigation with river water.
The growth of the number of rates at the price increase contributes to investor concerns about the decrease in volumes of stocks of coffee accompanied with the steady increase in demand.
The funds have many reasons to do," bullish "bets. Earlier this year, there is a low volume of stocks of coffee, while in the largest coffee manufacturers, Brazil and Vietnam, there is a reduction in production volumes.
In addition, bad weather conditions in Vietnam, where the prolonged rainy season can reduce the quality of grown coffee beans also contribute to "bullish" trend in the coffee market. Indonesia also expects weaker harvest.
Coffee consumption from October 2015 for September 2016 rose by 2.6% over the same period last year - 155.7 million bags of 60 kg, while the world production of 151.4 million bags in shows a significant deficit on the market.
44% of the demand for coffee in the USA goes to people aged 19 to 34 years. In 2008, the share of daily users of coffee among people from 18 to 24 years was 34%, in 2016 this figure rose to 48%. In the age category of 25 to 39 years rate increased over the same period from 51 to 60%, and among those over 60 - has decreased from 76 to 64%. Reducing consumption is also recorded in the age group from 40 to 59 years.
