It will be another tough journey for the coffee market this year as supply shortage will continue to hound the commodity, according to some experts.
The low quality bean, robusta, seemed to have been winning the tag-of-war against the high quality been Arabica coffee.
With the robusta slipping to level not since in four years, the low quality been offset the record production of arabica coffee in Brazil, Columbia and Honduras, prompting the International Coffee Organization an expectation that supply shortage on this commodity will persist this year, amounting to 3.5m 60 kg bags of coffee starting this October.
The ICO cited that the negative outlook for the coffee market was due to the lower crops expected from its major suppliers.
Due to a severe drought in Brazil in the previous year and the El Niño in Indonesia in Vietnam, world output fell to its lowest peak since 2012 where robusta production was badly hurt, sending coffee prices below the $20 mark, the prices before the start of 2016.
This year, the low quality bean is expected to dip further as experts provided a negative prospect for recovery in Brazil’s production.
This scarcity in robusta and the abundance in the Arabica will cause a price difference in the coffee market according to analysts, whoch they call arbitrage, may lead to a shift in coffee usage as more the amount of robusta may be reduced while arabica shares may be encouraged if the price difference continues to narrow.