Coffee prices rose last week on news of another cold front reaching Brazil's main coffee producing areas. The system could affect Paraná and southern Minas Gerais but, according to local meteorologists, represents only a small threat of frost. As we enter the Brazilian winter, it has clearly become a "weather" market. Prolonged dry conditions have also become a concern for the early stages of development of Brazil's next crop, as forecasts indicate little precipitation in the coming days.
When the World Economic Forum opened in Davos, Switzerland, on Monday, the International Monetary Fund said the global economy faces its biggest test since World War II, challenged by crisis and crisis. "We face a potential confluence of calamities," said IMF Executive Director Kristalina Georgieva. She warned that the Russian invasion of Ukraine has "aggravated" the effects of the Covid-19 pandemic, weighing on economic recovery and inflation as the cost of food and fuel rises.
Rising interest rates are increasing pressure on high-debt countries, companies and households. Market turmoil and ongoing supply chain constraints also pose a risk. And if that is not enough, there is also climate change.
As a direct consequence of the Russian invasion, Ukraine's grain exports during the month of May were 60% lower than a year ago, in yet another alarming sign of the international food crisis. US consumer food prices rose 9.4% in April compared with a year earlier, while wholesale food prices rose 18%. Average gasoline prices in the US reached $4.60/gl, an all-time high. Gasoline prices have risen 30% since the Russian invasion of Ukraine in late February. Crude oil continued to rise last week, reaching its highest levels since late March.
In source news, coffee exports declined by 24% year-on-year in April , according to the Uganda Coffee Development Authority. UCDA cited adverse weather as a drought in some parts of the country, which reduced production. Uganda is the eighth largest coffee exporter in the world, and the largest in Africa. Short-term availability of key origins such as Colombia and Guatemala is virtually non-existent.
During the week, the coffee market posted 1-1/2 month highs with increasing volatility driven by Brazilian weather news. Coffee prices were also supported by a renewed rise in global commodity prices.