1. Weekly News

Indonesia

Indonesian President Calls for Significant Increase in Coffee Production

The Indonesian President instructed the Minister of Agriculture to increase coffee production from1 to 2 metric tons (mt) per hectare (ha) as of W28 to 8 to 9 mt/ha during a coffee harvest inspection in West Lampung. This region has 60 thousand ha of coffee plantations. The President highlighted the importance of enhancing equipment, fertilization practices, and spacing to increase yields. This strategy promises to benefit coffee farmers and position them to capitalize on the growing global demand and rising prices. Additionally, the President emphasized the need to process and industrialize all agricultural commodities to increase their added value.

Vietnam

Vietnam's Coffee Exports Tighten Amid Drought and La Niña Concerns

Vietnam's coffee exports are forecasted to remain tight by the end of 2024 due to drought and the potential impact of La Niña. Vietnam's coffee production in the 2024/25 season is expected to decline by 5% year-on-year (YoY) to 1.56 million metric tons (mmt) due to the earlier drought. Additionally, La Niña could cause excessive rain during the fruit collection period, disrupting the harvest. Vietnam's coffee exports in Jun-24 have dropped to the lowest level since the 2012/13 season, and the exports for the last three months of the 2023/24 season are expected to be less than half of the five-year average. This situation is contributing to a significant increase in coffee prices.

Brazil

Brazil's Coffee Exports Reach Record High in 2023/24 Crop Year

Brazil's coffee exports hit a record high of 47.3 million 60-kilogram (kg) bags, marking a 32.7% YoY increase in the 2023/24 season (Jul-23 to Jun-24), surpassing the previous record of 45.6 million 60-kg bags in the 2020/21 crop year. The export revenue reached USD 9.8 billion, showing a 20.7% YoY increase. The United States (US) emerged as the top destination, with 7.1 million 60-kg bags purchased, representing a 2.8% YoY increase, followed by Germany and Belgium. In addition, Brazil's coffee exports to China experienced 186.1% YoY growth, reaching 1.64 million 60-kg bags.

Arabica coffee exports increased by 16.7% YoY to 35.4 million 60-kg bags, and Canéforas (Conilon and Robusta) exports surged to 8.24 million 60-kg bags, marking an increase of 461.1% YoY. This rise in Canéfora exports is due to lower availability in Vietnam and Indonesia due to climatic problems.

In Jun-24 alone, Brazil exported 3.5 million 60-kg bags of coffee, making it the highest monthly record. The export revenue was USD 851.4 million, which was also unprecedented for the period, according to the Brazilian Coffee Exporters Council (Cecafé).

Ethiopia

Ethiopia's Coffee Exports Surge in 2023/24 Season

Ethiopia's coffee exports in the 2023/24 season reached 298.5 thousand mt, valued at USD 1.43 billion, marking a YoY increase of 20% in volume and 7.5% in value. In Jun-24 alone, exports reached 46 thousand mt, achieving 108% of the month's target. Ethiopia is widely regarded as the birthplace of coffee. The coffee tree is native to the forest lands of southwestern Ethiopia, especially in areas like Kaffa, where coffee is said to have been discovered. As of W28, Ethiopia is one of the world's largest producers of Arabica coffee, a species renowned for its beans' superior quality and aromatic complexity.

Colombia

Colombia's Coffee Production and Exports Show Strong Growth in Jun-24

Colombia has seen a significant increase in coffee production, with Jun-24's output reaching 1.17 million 60-kg bags, marking a 23% YoY increase. The cumulative production in the first half of 2024 reached 5.82 million 60-kg bags, an increase of 16% YoY. Colombian coffee exports also showed a remarkable performance in Jun-24, with a 36% YoY increase, totaling 1.02 million 60-kg bags.

2. Weekly Pricing

Weekly Coffee Pricing Important Exporters (USD/kg)

Yearly Change in Coffee Pricing Important Exporters (W28 2023 to W28 2024)

Brazil

In W28, Brazil's coffee prices increased 0.91% week-on-week (WoW) to USD 6.66/kg after a weekly increase of 4.27% in W28. Brazil’s coffee harvest in the 2024/25 season reached 58% by the first week of Jul-24, surpassing the five-year average of 54% due to dry weather which is favorable for coffee harvest. However, given the global supply shortage due to decreased harvests in Indonesia and Vietnam, coffee prices will likely increase further.

Colombia

Coffee prices in Colombia increased by 3.91% WoW to USD 7.97/kg in W28. Surging coffee futures prices drive the price increase due to poor harvests in Indonesia and Vietnam. Colombia is the world's third-largest coffee producer after Brazil and Vietnam, producing approximately 14 million 60-kg bags of coffee annually. The Colombian coffee harvest ended three consecutive years of decline in 2023, and the production in the first half of 2024 reached a three-year high of 5.82 million 60-kg bags, which is supposed to reinforce Colombia's position as a significant player in the global coffee market.

Vietnam

The wholesale coffee prices in Vietnam increased by 3.59% WoW to USD 4.91/kg in W28. Vietnam’s coffee industry faces significant challenges due to drought and La Niña conditions. The director of the Vietnam Coffee Association (VCA) mentioned that Vietnam’s coffee production for the 2024/25 season is forecasted to decrease by 5% YoY, reaching 1.56 mmt due to the impact of an earlier drought. As a result, there has been a surge in global market prices.

3.Actionable Recommendations

Enhance Agricultural Practices for Increased Coffee Yield

Indonesia should improve agricultural practices to achieve the president's ambitious target of increasing coffee production to 8 to 9 mt/ha. It should invest in better equipment, fertilization techniques, and optimized plant spacing. Additionally, processing and industrializing coffee and other agricultural commodities can significantly increase their added value, benefiting farmers and the economy by capitalizing on rising global demand and prices.

Mitigate Climate Impact and Stabilize Exports

Vietnam must address the challenges of drought and La Niña by investing in irrigation and other climate-resilient agricultural practices. With an expected 5% decline in coffee production, the country should implement measures to stabilize and possibly increase future yields. Tightened exports and rising coffee prices necessitate strategic management of the available supply to meet global demand while maintaining domestic stability.

Capitalize on Record Exports and Ensure Sustainability

Brazil should leverage its record-high coffee exports and substantial revenue increase to reinforce its position as a leading coffee exporter. It should invest in sustainable agricultural practices and infrastructure to ensure long-term productivity. Diversifying export markets, significantly to rapidly growing destinations like China, and maintaining high-quality standards can further enhance Brazil's global market presence.

Sources: Kontan, Theedgemarkets, Valor, Lobservateur, Portal Do Agronegócio