Central do Cafe, a mid-sized coffee merchant located in Brazil's Minas Gerais state, has temporarily suspended its operations this week to renegotiate its debts, as reported in a note shared by local farmers and media outlets on Thursday.
The surging global coffee prices due to a supply shortage have put pressure on businesses. They face risks if farmers are unable to meet contracted volumes and are financially exposed to the increasing prices in coffee futures.
Last year, Brazilian coffee traders were granted a grace period by the courts to restructure debts following defaults from farmers.
Based in Muzambinho, in the South Minas Gerais region, Central do Cafe sources coffee from local producers and distributes it to roasters or exporters. Minas Gerais stands as Brazil's top coffee-producing state, the world's largest coffee supplier.
In a notice to its clients circulated by a farmer with Reuters, Central do Cafe announced a temporary closure for an unspecified period to assess its financial standing.
"We will soon convene meetings with employees and business partners," stated the company in the notice, underscoring the necessity of the operational break while it works on debt renegotiations.
While a local newspaper in the area published the company's statement, attempts by Reuters to reach the company in Brazil were unsuccessful.
Arabica coffee futures, the global benchmark traded in New York, surged by 70% last year and have risen by 37% this year due to scarce market supplies.