2024-01-19T07:57:33+00:00
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/ The disturbances affecting shipping in the Red Sea caused damage to the market for “Robusta” coffee beans, which is the variety used in the manufacture of instant coffee, and turned the usual flows of this trade upside down.
Robusta coffee buyers are avoiding buying from Vietnam, its largest producer, due to higher shipping costs and longer-than-usual travel times, and are instead seeking to secure more supplies from Brazil, according to people familiar with the matter, who asked to remain anonymous because the information is private. .
Houthi attacks on commercial ships in the Red Sea have disrupted a major corridor for coffee exports from Vietnam, forcing many commodity carriers to take longer routes.
As a result, premium Robusta futures for January delivery rose more than 30% over the next contract this month. This comes after a global grain shortage has already pushed up prices by nearly 60% in 2023, as a result of the dry weather that hit the Asian country.
In this regard, John Goodwin, chief commodity analyst at ArrowStream Inc., said: “I see the Red Sea crisis combined with the drought in Southeast Asia leading to some global Robusta market shares shifting to Brazil permanently.”
This is not the first time that Robusta trade has been disrupted through the Red Sea region. Two years ago, a ship blocking traffic in the Suez Canal turned markets upside down.
In Vietnam, shipments of export company Phuc Sinh Corp. have declined since the outbreak of the Red Sea attacks, with shipping prices for goods heading from Asia to Europe rising. Prices have risen almost seven-fold to $4,000 per container, according to Chairman Van Minh Thuong.
However, while Brazil’s exports are on the rise, the country is unable to fill the gap left by Vietnam, which produces more than a third of the world’s robusta supply.