W13 Coffee Update: Vietnamese Coffee Exports Projected to Exceed USD 5 Billion in 2024, Climate Challenges Impact Global Coffee Markets

Vietnamese Coffee Exports to Exceed USD 5 Billion in 2024

Vietnamese coffee exports increased in 2023, reaching USD 4.2 billion, and projected to surpass USD 5 billion in 2024. However, most exports are in raw form, with processed products accounting for only about 13%. Domestic consumption remains low despite export growth. The Vice Chairman of the Vietnam Coffee Cocoa Association (Vicofa) attributed the impressive export growth to record-high selling prices, which recently reached USD 4.01 per kilogram (kg) (VND 100,000/kg). With prices doubling since 2022, some businesses may struggle to fulfill previously signed low-price contracts.

Heatwave Challenges Vietnam's Robusta Coffee Production

The leading producer of robusta coffee beans globally, Vietnam is affected by a heatwave, impacting local coffee cultivation and production. Dry weather conditions with reduced rainfall, reaching the lowest levels in a decade, adversely affect coffee bean yields. Consequently, the global supply of Robusta coffee beans, primarily used for instant coffee and espresso, is expected to dwindle. Furthermore, Vietnamese farmers are increasingly turning away from coffee cultivation, questioning its agricultural value, and transitioning to alternative crops like durian, avocado, and passion fruit. This shift significantly impacts Vietnam's coffee bean production, with Vicofa estimating a 20% year-on-year (YoY) decline in coffee bean exports from Oct-23 last year to Sept-24.

Colombia's Coffee Industry Struggles with Crisis Amid Climate, Economic, and Political Challenges

Colombia's coffee industry is facing climate, economic, and political challenges. Rising costs of labor and inputs, alongside low coffee prices, are worsening the plight of the 550 thousand coffee-farming families. A national strike is set for April 28, with further protests planned for Aug-24. With prices plummeting, coffee farmers have experienced a significant income decline, from over USD 5/kg in 2023 to approximately USD 3/kg in W13. Moreover, there has been a 35% reduction in coffee production areas over the last five years. Climate change adds to the woes, with temperature increases, rainfall pattern alterations, and diseases like rust and coffee borer hampering productivity. The impending La Niña phenomenon, expected from June to August, could exacerbate challenges by bringing excessive rainfall to Colombia's coffee regions.

Peruvian Coffee Exports Surged 66% YoY from Jan-24 to Feb-24

Peruvian coffee exports significant from Jan-24 and Feb-24, reached over USD 132 million, marking a 66% YoY increase. The main export destinations include the United States (US), Belgium, Germany, Canada, Sweden, and the Netherlands. These countries collectively accounted for over 65% of the total exported volume, with the US leading the way with 7,558 metric tons (mt) valued at USD 27.5 million. Belgium followed closely, acquiring 7,425 mt worth USD 27.6 million, marking a 3.9% YoY increase in volume and a 2.9% increase.

Kenya's Coffee Exports Navigate New EUDR

Kenya faces a significant change in its coffee exports to the European Union (EU) due to the new EU Deforestation Regulation (EUDR), effective December 30. The regulation aims to combat global deforestation by prohibiting the sale of products originating from recently deforested land or contributing to forest degradation. This impacts various commodities, including coffee, soy, beef, palm oil, wood, cocoa, and rubber. European companies must now ensure their products meet these standards, with traceability to the specific land of origin required to prove compliance. The regulation seeks to reduce greenhouse gas emissions and biodiversity loss by promoting the consumption of "deforestation-free" products.