- Coffee production appears declining, report shows.
- Black Rifle Coffee Company is currently facing a lawsuit.
Underdeveloped regions are slowly getting back on track after the covid-19. Brazil and Columbia, the coffee producing giants, have seen exponential decline in coffee production during this period. The scenario does not appear to be changing currently, a recent International Coffee Organization (ICO) report shows. Global production has a negative impact on companies associated with this sector.
South American Exports Sees Heavy Downturn
Black Rifle Coffee Company (NYSE: BRCC) saw negative momentum in shares. BRCC stock closed down 5.42% less than its previous close, making it almost 10% loss in just a couple of days. Currently, it was trading at a market price of 7.33 USD at the publication time.
According to the ICO’s January 2023 report, coffee prices have plunged slightly since December last year. Where Colombian milds have decreased by 2.3% to 218.91 USD/lb, other milds have plunged by 1.7% to 206.7 USD/lb. However, the London futures market gained 2.2% while the New York market rose by 3.9% in January 2023. Moreover, price differentials went lower as Brazilian Naturals descended 11.13% to 48.88 USD/lb and other milds slipped 12.15% to 12.5 USD/lb.
ICO also highlighted that global green beans exports declined by 7.7% from 10.64 Million bags in December 2021 to 9.81 Million bags in December 2022. However, Robustas remained unaffected as the coffee variant gained 1.1% during the same timeframe. Additionally, shipment of milds went down from 1.64 Million bags in Dec ’21 to 1.24 Million bags in Dec’ 22, an over 24% decline.
Both Brazil and Columbia being South America’s major exporters witnessed heavy downturn in exports. While the former saw a 15.2 % decline from 3.79 Million bags to 3.21 Million bags, the latter dwindled 11% from 1.18 Million bags to 1.05 Million bags in a year.
Another ICO survey shows covid-19 impact over the sector. The pandemic caused governments around the globe to take precautionary measures like social distancing, lockdowns and more. This would have led the farmers to maneuver on an unhealthy course of action like child labor considering fall in coffee production. Luckily, none of that happened. Nonetheless, the production jumped substantially soon after the authorities gave relief from pandemic restrictions.
BRCC Stock Price Action
MACD indicates a modest buyer dominance in the market currently. However, RSI and balance of power points with a slight seller influence. BRCC stock has lost over 30% during the past 6 months. Currently, Fib retracement shows company shares holding a support around 7 USD and a resistance at 7.8 USD. A breakout in price will potentially test the current resistance as support, while opening a window to reach its September 2022 high.
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Source: https://www.thecoinrepublic.com/2023/02/19/brcc-stock-price-analysis-coffee-production-hitting-the-sector/