Coffee fanatics are going to be left disappointed when stocks of Nescafe instant coffee begin dwindling. The vessel blocking the worlds most important maritime checkpoints is holding containers of the popular morning brew, reports News24.
The container ship became jammed in Suez on Tuesday, preventing the movement of $10 billion worth of goods through the Egyptian waterway.
The vessel, weighing in at over 200 000-tons could take weeks to dislodge. Making matters worse: only two major robusta coffee producers (Brazil and Ivory Coast) don’t use this route. About 12% of the global trade goes thorough Suez.
Adding to concerns is the back-log effect which will see stocks back up at ports when the traffic clears. Such ports include Antwerp and Rotterdam who has traded coffee for 40 years.
Europe’s coffee makers can’t easily use coffee from Brazil due to the taste of the product, resulting in in some suppliers turning to East Africa to bridge the shortfall of robusta beans from Vietnam. This means that substitutes, including milder-tasting Ugandan beans are being bought.
But, these beans also travel through Suez. Traders who have stored them in Europe are charging a hefty premium in the physical market, peaking at $450 a metric ton above the exchange price for Vietnamese coffee (three times the normal rate).
Brazil has, however, benefited so far. The robusta producer exported a record 4.9 million bags in 2020 (24% increase from the previous year), according to Cecafe.
Despite this, most of those beans ended up in stockpiles instead of with roasters, because replacing Vietnamese beans with Brazilian would change the taste of the final product. East African beans are said to be the better replacement.
Even if this happens, with ships sent around Africa to avoid the gridlock, it would still take time to clear a queue of vessels. It appears to be a matter of solving one problem with another one.