The Suez Canal is blocked and Europe is facing a shortage of robusta beans, a raw material for instant coffee.

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Robusta coffee prices rebounded from a two-week low on market expectations that the Suez Canal blockage would further hamper shipping, which was already in a serious bottleneck. On March 26th, Robusta Coffee in the May futures contract rose 2.8 per cent, the highest increase since March 9, while London rose 1.9 per cent to $1391 a tonne for the last time.

The blockage of the Suez Canal is an important waterway for East African and Asian countries to enter Europe. The disruption means that ships can only call at ports such as Antwerp and Rotterdam until the waterway is open. Or choose to detour the Cape of good Hope, which requires an additional 19-24 days according to the speed of different ship types, while ships that have not yet arrived at the Suez Canal will need at least 8-10 days if they detour the Cape of good Hope in time. European coffee traders have delayed the arrival of Vietnamese Robusta beans ordered by global container shipments, and the blockage has strained European stocks of Robusta beans.

(a large number of ships began to bypass the Cape of good Hope to reduce congestion on the Suez Canal.)

The logistics director of Sucafina SA, the main shipping route for European imports, said that for every day or two of the Suez blockage, there was a logistics delay of about a week. According to market forecasts, it may take days or even weeks for the Suez Canal to resume its waterway. According to this figure, all logistics passing through the Suez Canal will be delayed by at least two to three weeks.

(the canal is blocked three days after the incident)

At present, the stock of Robusta coffee in Europe is so tight that the inventory of most European coffee roasters can hardly support the delay of two to three weeks. Now only Robusta in Brazil and C ô te d'Ivoire do not need to travel to Europe via the Suez Canal, but the harvest of Brazilian Robusta coffee will not begin until the end of March at the earliest, and concentrated exports will have to wait until May. Therefore, if the Suez Canal is not reopened as soon as possible, there may be a shortage of raw materials for instant coffee. To this end, the price of Vietnamese Robusta coffee beans in the European spot market has risen sharply, with the latest price as high as 450 US dollars per ton, three times the normal price.

Carlos Mera, an analyst at Rabobank International in London, said that if the canal problem could be resolved within a week, Robusta futures prices would not continue to rise because the Robusta contract reflected more of Brazil's economic growth than Vietnam's Robusta. If the problem lasts longer, the market price of Robusta coffee beans may continue to rise. But analysts believe the canal blockage will be cleared by the first notice day of Robusta's contract in May (the end of April).

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