Coffee prices in India hover between Rs 300 and Rs 400 per kilogram, with projections indicating a potential 20–30% increase if supply disruptions persist. Escalating tensions in the Middle East, including clashes between Iran, Israel, and the United States, disrupt global shipping routes and push commodity costs higher, impacting supermarket prices and cafe menus worldwide.
Strait of Hormuz Blockade Fuels Freight Rate Spike
The blockade of the Strait of Hormuz, a vital chokepoint for 20% of global oil shipments, intensifies since February 28. Attacks and counterattacks halt vessel transit, driving up freight rates across commodities, including coffee. Airspace closures and flight suspensions exacerbate delays, inflating logistics expenses for exporters.
Coffee Markets React Sharply to Uncertainty
Market indicators highlight the strain. May Arabica Coffee (KCK26) climbs 3.85 points, or 1.37%, at Monday’s close. May Intercontinental Exchange Robusta Coffee (RMK26) surges 148 points, or 4.08%, hitting a two-week peak. Speculative buying amid supply fears accelerates the rally.
Arabica production centers in Brazil, Colombia, and Ethiopia face route shifts, while Robusta sources like Vietnam, Indonesia, and India encounter rising transport costs. Ethiopian shipments slow due to elevated shipping fees and rerouted paths.
India’s Coffee Sector Feels the Heat
As a key producer and exporter of both varieties, India cannot shield consumers from global pressures. Hospitality chains, including Starbucks and Cafe Coffee Day, prepare to raise prices. Oil price hikes compound cultivation and transport expenses, tightening supplies from Ethiopia and Sudan.
Long-Term Retail Impacts Loom
Experts predict full effects on retail shelves within a year, as raw material and fuel costs propagate. Even powerhouse producers like Brazil and Vietnam experience indirect hits from altered trade flows, signaling broader supply constraints ahead.
