CCL Products, Goodricke Group: Coffee stocks jump up to 40% in a month; what's brewing?

The surge in share prices of tea and coffee producers could be attributed to fears of supply constraints given unfavorable weather conditions in coffee-producing countries, especially Brazil.

Frosts can reduce agricultural yields in coffee crops if they are intense, as they cause leaves to fall, reducing trees’ vitality. Brazil’s current crop is nearly all harvested, but any major frost would hit production potential for 2025.

The last major frost to hit coffee areas in mid-August happened in 1978, according to data from forecasters.

Frosts can also have a negative impact on sugarcane fields if they are strong. Sao Paulo is Brazil’s largest sugarcane-producing state, the report added.

Earlier in July too, coffee prices in Brazil remained elevated. Arabica averaged BRL 1,420/bag (60 kg), while Conilon was at BRL 1,270/bag, both reflecting a 5% increase from the previous month.

The information holds significance since India imports most of its coffee from Brazil.

Coffee varieties

Arabica is the most common (and certainly the most commercialised) type of coffee in the world. That's because it tastes sweeter and more delicate, and the coffee itself tends to be less acidic.

"Arabica beans are grown in areas with high altitudes above sea level, especially those where rainfall is abundant. Brazil, known for its lush rainforest, is the world's largest exporter of Arabica grains," says the Brazilian Coffee Company.

The Arabica variety represented around 69% of the Brazilian coffee output in 2023. Although Arabica is more sensitive to the biennial effect than Robusta coffee, this variety's higher market prices offset the lower yield.

In fact, the revenue generated by Arabica coffee in Brazil reached almost 42 billion Brazilian reals in 2023, the Statistica report adds.

Coffee Price Outlook

As per the InvestingHaven forecast, the price of coffee is set to double by 2025. This is based on favourable supply/demand trends in the global coffee market, combined with favourable leading indicators Brazilian Real and Coffee CoT’s.

About CCL Products and Goodricke Group

CCL Products (India) is a listed public company. It was established in 1994 with the objective of producing the finest and most exquisite coffee in the world. As per the company's website, Challa Rajendra Prasad is the executive chairman of the company.

Goodricke Group is a tea and coffee producing company headquartered in West Bengal. It was established in 1977.