1. Weekly News

Global

El Niño Impacts Coffee Production in Vietnam and Brazil; La Niña Expected to Have Mild Effects on 2024/25 Coffee Harvest

The 6th Coffee and Climate Forum of Cooxupé highlighted the adverse impacts of El Niño on coffee production in Vietnam and Brazil. With the coming La Niña phenomenon, an agro meteorologist concluded that La Niña will influence the global 2024/25 coffee harvest, but the impact will be relatively moderate. The peak of the phenomenon is expected in late Dec-24 and early Jan-25, potentially leading to a drier end of the year with slightly higher temperatures.

Brazil

Brazil Lowers 2024/25 Coffee Harvest Projection to 65.9 Million Bags

Consultancy company StoneX has revised its projection for Brazil's 2024/25 coffee harvest, lowering it by 1.7% to 65.9 million 60-kilogram (kg) bags. Despite the revision, the Brazilian harvest is still expected to grow by 2.5% compared to the previous season, marking the third consecutive annual increase. This reduction is primarily due to adverse weather conditions impacting the harvest of Robusta/Conilon (canephora). Specifically, canephora production is forecasted to drop by 1.6% year-on-year (YoY) in the 2024/25 season. In contrast, Arabica coffee production is projected to increase by 1% from the previous forecast, resulting in a 4.6% YoY increase.

Brazil's Soluble Coffee Exports Rise in First Half of 2024

According to the Brazilian Instant Coffee Industry Association (ABICS), Brazil achieved a 3.3% YoY increase in soluble coffee exports in the first half of 2024, reaching 1.915 million 60-kg bags. This growth contributed to a 13.8% YoY increase in revenue, totaling USD 402.9 million. The United States (US), Indonesia, and Russia primarily import Brazil's soluble coffee. Domestically, Brazil saw a 1.2% YoY rise in soluble coffee consumption, totaling 525.8 thousand 60-kg bags, driven by a remarkable 95.6% YoY increase in freeze-dried coffee.

Vietnam

Global Coffee Prices Stabilized by Vietnam's Export Reduction

Global coffee prices have fallen significantly over the past week. However, news about the reduction in Vietnam's exports has prevented prices from falling further. In particular, Vietnam exported 964 thousand metric tons (mt) of coffee in the first seven months of 2024, down 13.8% from a year earlier. At the same time, Vietnam's late-season coffee market is experiencing slow trading due to supply shortages.

Indonesia

Indonesia Sees Price Drop in Robusta Coffee

In Indonesia,prices dropped in the Robusta coffee market due to increased supplies during the harvest. Indonesia's coffee exports from Sumatra island decreased by 51.9% YoY in Jun-24 compared to last year. Due to abundant supply, premium Sumatra Robusta coffee beans were offered at USD 470/mt for the Aug-24 to Sep-24 contracts, down from last week's USD 600/mt for the Sep-24 contract.

Peru

Peru Exported First Coffee Shipment to the EU and US

Peru successfully exported its first 155 mt of coffee from San Martín to the European Union (EU) and the US in Jul-24. This shipment is part of an 820 mt trade agreement valued at USD 3.2 million, set to be completed by Dec-24. This initiative benefits 403 producers, a significant portion of whom are female leaders and young people. Coffee production is vital in San Martín, with 64 thousand hectares (ha) producing 62 thousand mt annually.

2. Weekly Pricing

Weekly Coffee Pricing Important Exporters (USD/kg)

Yearly Change in Coffee Pricing Important Exporters (W31 2023 to W31 2024)

Brazil

Coffee prices in Brazil decreased by 9.3% week-on-week (WoW) to USD 6.06/kg in W31 compared to USD 6.67% in W30. Based on monthly and yearly comparisons, prices dropped by 9.16% month-on-month (MoM) and 4.72% YoY, respectively. Global coffee prices have dropped significantly in recent weeks due to advanced harvests in Brazil and an abundant supply in Indonesia. Market participants closely monitor the weather conditions during the final phase of the harvest, as the intensified harvests have raised concerns about yield and further impacted prices.

Colombia

Colombia's coffee price declined by 3.07% WoW to USD 7.59/kg in W31 due to robust local production and recovering global supply. Colombia’s coffee production increased by 16% YoY to 5.82 million 60-kg bags in the first half 2024. In Jun-24 alone, the production increased by 23% YoY to 1.17 million 60-kg bags. The trend is also reflected in the export market. In Jun-24, the country’s coffee exports rose 36% YoY to 1.02 million 60-kg bags.

Vietnam

In Vietnam, coffee prices declined by 2.98% WoW to USD 4.88/kg in W31 due to the price drop in Indonesia. Vietnam's coffee exports decreased in the first half of 2024 due to a supply shortage. However, with the processing of harvests in Brazil and Indonesia, the market began to stabilize. Concerns about a severe drought in Vietnam affecting Robusta crops could impact global supply in the future and keep prices higher.

3. Actionable Recommendations

Optimize Harvest Efficiency and Expand Soluble Coffee Production

Brazil should focus on optimizing harvest efficiency to counter the negative impacts of adverse weather conditions. Investing in modern agricultural practices and technologies can improve yield and quality. Additionally, expanding the production and export of soluble coffee, which has shown significant growth, can help Brazil tap into new markets and increase revenue.

Address Supply Shortages and Invest in Drought-Resistant Varieties

Vietnam must address the current supply shortages by supporting farmers with financial incentives and technological assistance to increase production. Investing in drought-resistant coffee varieties and improving irrigation systems will help mitigate the effects of potential future droughts. Promoting sustainable farming practices can also enhance the coffee sector's resilience.

Manage Supply and Stabilize Prices

Indonesia should manage the increased supply of Robusta coffee by exploring new markets and enhancing marketing efforts. Implementing storage and inventory management solutions can help stabilize prices. Collaborating with international trade organizations to promote Indonesian Robusta coffee as a premium product can also support better price realization.

Sources: Tridge, Noticias Agrícolas, Portal Do Agronegocio