Traders reroute coffee bound to Russia, demand hit from war seen
11/04/2022 13:06
By Marcelo Teixeira
BOSTON, April 11 (Reuters) - Traders are diverting coffee
shipments that were initially expected to go to Russia, and some
have stopped selling to that market altogether, attendees at a
U.S. coffee conference said.
Although food trade is not included in sanctions imposed on
Russia after its invasion of Ukraine, difficulties in processing
payments from Russian importers and concerns about the safety of
ships in the Black Sea have cut shipments of coffee and other
goods to the country. urn:newsml:reuters.com:*:nL5N2VI3TF
Russia, which calls its actions in Ukraine a “special
operation,” is among the five largest coffee importers in the
world. Consumers in Russia are hoarding food due to worries that
supermarkets will run out of supplies. urn:newsml:reuters.com:*:nL5N2VK1RB
Coffee prices have surged more than 20% in Russia due to
higher costs, broker HedgePoint said last week. The brokerage
estimates that the ongoing war in Ukraine will lead to demand
reduction of around 1.3 million 60-kg bags. urn:newsml:reuters.com:*:nL5N2W4520
European food trader Marex sees the hit to coffee demand
higher, at around 1.8 million bags.
Olvin Lopez, commercial manager at Honduras-based coffee
exporter Inloher, said he had instructions from his firm's
partner, the French food trader Sucden, to redirect a coffee
shipment leaving Honduras bound for Russia to the port of New
York instead.
"They didn't say why they are rerouting the cargo, but it is
probably due to logistic issues," Lopez said on the sidelines of
a SCA Coffee Expo in Boston.
A coffee trader working for an international dealer, who
asked not to be named, said soft commodities trader ECOM had
decided to stop any business with Russia while the war
continues.
Sucden and ECOM did not return requests for comments.
Another trader said, however, that some countries continue
to supply Russia with coffee, notably top grower Brazil.
"People don't like to say much, but there are deals going
on, using crypto," he said. In addition, one coffee co-op was
closing a barter deal with a Russian dealer, where coffee would
be swapped for fertilizer, the trader said.
(Reporting by Marcelo Teixeira; Editing by Mark Porter)
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