Surge in coffee prices has restricted traders to focus on strategic purchases instead of stocking

Coffee prices have been rising sharply, leading global traders and roasters to reduce their purchases to minimal levels. The steep increase in costs has created financial strain, as suppliers struggle to convince retailers to accept the higher prices. Arabica coffee futures have surged significantly since November, making it difficult for buyers to maintain their usual procurement volumes.

Lower production in key growing regions, particularly Brazil, has reduced the availability of coffee beans, tightening supply. Many buyers have shifted to a cautious purchasing strategy, acquiring only what is immediately needed rather than stockpiling. Deals are being conducted with strict quality checks before finalizing payments, reflecting the conservative approach in the market.

The sharp price increase has disrupted the industry, with some coffee businesses uncertain about their ability to continue operations. Retailers are resisting the higher prices set by roasters, leading to prolonged negotiations and shortages in some stores. Warehouses near major ports in the US are holding significantly lower coffee stocks, forcing storage companies to return silos and cancel leasing contracts.

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Market consolidation is becoming likely, with larger companies leveraging their capital to increase trading volumes while smaller players face financing challenges. The expansion of coffee plantations in countries such as India, Uganda, Ethiopia, and Brazil is expected to gradually increase supply. If Brazil achieves a strong harvest in the coming cycle, it could reverse the price trend, but until then, the market remains under pressure.