1. Weekly News

Brazil

Limited Transactions in Brazil's Coffee Market Amid Declining NYSE Futures and Stronger USD

Brazil's physical coffee market started the week with limited transactions, influenced by declining New York Stock Exchange (NYSE) futures prices and a stronger United States dollar (USD). On July 14, prices increased for Arabica and Robusta coffee, though trading volume remained low with sporadic sales of high-quality lots.

In the South of Minas Gerais, good-brew Arabica coffee, with 15% picking, stood between USD 256.73 (BRL 1,450.00) and USD 257.62 (BRL 1,455.00) per bag, and hard-brew Arabica in the Cerrado region ranged from USD 258.50 to 259.39 (BRL 1,460.00 to 1,465.00). In the Zona da Mata, "Rio" type 7 Arabica with 20% harvesting was priced between USD 217.78 to 218.67 (BRL 1,230.00 and 1,235.00) per bag. In Vitória, Espírito Santo, coffee Conilon type 7 was quoted between USD (BRL 1,285.00 and 1,290.00) per bag.

The Commodity Futures Trading Commission (CFTC) report indicated that significant funds and speculators held a net long position of 75.42 thousand contracts in ICE Futures US coffee, with commercial firms having a net short position of 78.57 thousand contracts. For Sep-24, coffee futures fell 1.16% to USD 0.245 per pound (lb) on the NYSE.

Record Export Growth for Brazilian Differentiated Coffees in 2023/24

The Brazilian Coffee Exporters Council's (Cecafé) Jun-24 Monthly Report revealed that in the coffee year from Jul-23 to Jun-24, Brazil exported 8.79 million 60-kg bags of differentiated coffees, generating USD 2.01 billion in revenue. These exports, which include high-quality and sustainably certified coffees, represented 20.5% of Brazil's total coffee export revenue. Differentiated Arabica accounted for USD 1.90 billion (94%), while Robusta contributed USD 119.71 million (6%).

The US was the largest importer, receiving 1.85 million bags (21.1%), followed by Germany, Belgium, the Netherlands, the United Kingdom (UK), and Italy. The top ten importers accounted for 77.6% of these exports.

Overall, Brazil achieved a historic high, with total coffee exports reaching 47.30 million bags, a 32.7% increase from the previous year. This resulted in a record foreign exchange revenue of USD 9.82 billion.

Peru

Peruvian Coffee Producers Secure International Deals

At the II Business Meeting of Coffee Growers in Chachapoyas, Amazonas, 37 Peruvian coffee producers from Amazonas, San Martín, and Cajamarca engaged with international buyers from Asia, Oceania, Europe, and North America. Organized by the Commission for the Promotion of Peru for Exports and Tourism (Promperú) and coordinated with the Ministry of Foreign Trade and Tourism (Mincetur), the event aimed to connect local specialty coffee producers with global markets.

During the event, 245 sales meetings resulted in USD 418 thousand in immediate sales, with an additional USD 5 million in sales expected over the next 12 months. This initiative highlights the increasing international interest in Peruvian specialty coffees and aims to boost exports. The Amazonas region's exports in 2023 amounted to USD 53.9 million, with 95% attributed to traditional products, primarily unroasted and undecaffeinated coffee.

Indonesia

Indonesian President Calls for Enhanced Coffee Productivity During West Lampung Visit

On July 12, 2024, the Indonesian President visited Kembahang Village in West Lampung, highlighting the need to increase productivity across Indonesia's 1.2 million hectares (ha) of coffee plantations. Emphasizing the importance of improving yields, he noted that as of W29, productivity ranges from 1 to 2 metric tons (mt) per ha, aiming to reach 8 to 9 mt, comparable to other countries.

The President urged the Minister of Agriculture to prioritize coffee cultivation, advocating for improved agricultural practices, including better fertilizer use and optimal planting distances. He also stressed the importance of enhancing the downstream processing of coffee, ensuring products are well-packaged and ready for export rather than being sold as raw materials.

In Lampung, which ranks second in national coffee production, most of the 155.16 thousand ha of plantations grow robusta coffee, with farmers utilizing grafting technology to achieve above-average yields. The national coffee area in 2023 reached approximately 1.27 million ha, with Indonesia being the fourth-largest coffee producer globally. The country's coffee export value increased significantly, reflecting the growing demand for robusta and arabica varieties. The President's visit and directives aim to boost coffee production and farmer welfare in Indonesia, specifically focusing on West Lampung's robusta coffee sector.

2. Weekly Pricing

Weekly Coffee Pricing Important Exporters (USD/kg)

Yearly Change in Coffee Pricing Important Exporters (W29 2023 to W29 2024)

Brazil

Brazil's ground and roasted coffee prices decreased to USD 6.38 per kilogram (kg) in W29 from USD 6.66 in W28, marking a decrease of 4.20% week-on-week (WoW) and a 1.92% year-on-year (YoY) increase from 6.26/kg in W29 2023. The limited transactions and fluctuating prices in Brazil's coffee market in W29, influenced by declining NYSE futures and a stronger USD, may signal potential price volatility.

Colombia

Coffee prices in Colombia increased slightly to USD 8.00/kg in W29, a 0.38% WoW and a 1.65% YoY. In Jun-24, Colombia's coffee market saw significant growth, with production reaching 1.17 million 60-kg bags, a 22.6% increase from the previous year, marking the highest level for Jun-21. The harvest value rose to USD 296.64 thousand (COP 1.2 billion), a 23.9% increase from Jun-23. Coffee inventories also grew by 2.4%, totaling 1.06 million bags. Domestic consumption slightly declined by 0.5% to 174 thousand bags. May-24 exports reached 935 thousand bags, a 10.6% increase, the second highest for May in the last five years.

Vietnam

Vietnam's robusta coffee prices increased to USD 5.04/kg in W29, marking a 2.65% WoW increase and a 6.11% monthly rise from 4.75/kg in W26. Vietnam's coffee exports are forecasted to remain limited until the end of the year due to drought conditions affecting production and the potential onset of La Niña, which could bring increased rainfall and further disrupt exports. Industry experts do not foresee a recovery in export volumes until Dec-24 at the earliest. This tight supply situation may exert upward pressure on global coffee prices, particularly for robusta beans, of which Vietnam is a significant producer.

3. Actionable Recommendations

Support Coffee Exporters

Brazil has achieved record-high coffee export revenues. To maintain this momentum amidst global supply uncertainties, the government should provide targeted support to coffee exporters, focusing on differentiated and sustainably certified coffees, including financial incentives and marketing assistance.

Enhance Coffee Production Practices

With Brazil’s coffee harvest exceeding historical averages, farmers and agricultural organizations should invest in advanced cultivation technologies and processing methods. Support farmers with precision agriculture tools to increase yield and quality, ensuring continued competitiveness in the global market.

Address Export Limitations in Vietnam

Vietnam’s coffee exports are forecasted to be constrained due to adverse weather conditions. The Vietnamese government and industry leaders should explore alternative supply sources and consider strategic reserves or trade agreements to mitigate potential impacts on global coffee prices and maintain supply chain stability.

Sources: Portal Do Agronegócio, Embrapa, La República, Republika, Daily Forex, Perfect Daily Grind