2024-01-19T07:57:33+00:00
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/ The disruptions that have hit shipping in the Red Sea have caused damage to the market for Robusta coffee beans, the variety used in making instant coffee, and have turned the usual flows of this trade upside down.
Robusta buyers are avoiding buying from Vietnam, the largest producer, because of higher shipping costs and longer-than-usual travel times, and are instead seeking more supplies from Brazil, according to people familiar with the matter, who asked not to be identified because the information is private.
Houthi attacks on commercial ships in the Red Sea have disrupted a key route for coffee exports from Vietnam, forcing many commodity tankers to take longer routes.
As a result, premium robusta futures for January delivery have surged more than 30% over the next contract this month, after a global grain shortage had already pushed prices up by about 60% in 2023, driven by dry weather in the Asian country.
“I see the Red Sea crisis combined with the drought in Southeast Asia permanently shifting some of the global robusta market share to Brazil,” said John Goodwin, chief commodity analyst at ArrowStream Inc.
This is not the first time that robusta trade has been disrupted through the Red Sea. Two years ago, a ship blocking the Suez Canal turned markets upside down.
In Vietnam, shipments from exporter Phuc Sinh Corp. have fallen since the Red Sea attacks as freight rates for goods from Asia to Europe have soared. Prices have risen nearly sevenfold to $4,000 per container, according to chairman Phan 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.