Coffee traders scramble to redirect shipments in Russia and Ukraine

Coffee traders are rushing to redirect cargo to Russia and Ukraine as the western sanctions imposed on London — Moscow and the move to close the port in Kyiv disrupted the flow of trade between the two countries.

Russia is the fourth largest coffee importer in the world after the European Union, the United States and Japan.

“(Trade flow) is stalling. In reality, these contracts need to be revoked. It’s just as easy,” said a coffee trader from a large international company based in Geneva. I did.

Russia and Ukraine together make up almost 4 percent of the world’s coffee consumption.

Both countries mainly import Robusta coffee beans and are often used to make instant coffee. Beans are a cheaper alternative to the smoother-tasting Arabica.

The world’s largest container ships, including the top three companies (MSC, Maersk, CMA CGM), have temporarily suspended freight with Russia, and Ukrainian ports have been closed since the Russian invasion.

“Some (shipping) lines still say (shipping to Russia), but the devaluation of the ruble has effectively frozen the market. (Russian) roasters can’t afford (to buy).” A European-based coffee trader, an international company, said.

The ruble has fallen more than 30% against the dollar. This is because domestic aggression and international roasters are afraid that demand will collapse as local prices have tripled.

“We expect consumption to drop significantly in (Russia and Ukraine). The combined effects of war and very high coffee prices are likely to lead to lower demand,” Rabobank said in a memo.

Geneva-based traders said they couldn’t even catch buyers in Ukraine and had to make a one-sided decision to cancel the contract and redirect the shipment.

Three coffee exporters from Vietnam’s major exporter, the world’s number one lobsta producer, said last week there were virtually no shipments to Russia, one exporter working to cancel contracts with Russian customers. Said.

“Based on the current situation and government recommendations, agricultural exports to Russia, including coffee, will decline sharply,” said a Ho Chi Minh City-based exporter.

By Maytaal Angel