Opinion

Indian Coffee Exports Surging: 10% Rise Expected in 2024 Amid Global Production Challenges and Soaring Prices

Published Jan 16, 2024
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The global coffee market is experiencing increased volatility and price elevation due to adverse weather conditions in major coffee-producing regions. Brazil is facing challenges in coffee production, potentially linked to climate phenomena, resulting in strained domestic supply and anticipated price increases. Colombia is expected to see upward pressure on coffee prices in December, driven by improved export volumes, limiting availability domestically. Vietnamese coffee prices may rise due to potential weather concerns related to the El Niño phenomenon. Traditionally known for tea production, India is gaining significance in the coffee market, with a forecasted 10% increase in coffee exports in 2024. The January 2024 Outlook Report by Tridge offers valuable insights for stakeholders navigating the evolving coffee landscape.

The global coffee market is entering a phase of increased volatility and price elevation, primarily influenced by weather conditions in major coffee-producing regions. According to Tridge's January 2024 Outlook Report: Coffee, Sugar and Value-Added Products, adverse weather in Brazil, possibly linked to climate phenomena, is hampering coffee production. The anticipated rise in prices is a consequence of the challenges faced in export volumes, contributing to a strain on domestic supply. Colombian coffee prices are expected to witness upward pressure in January due to improved export volumes. Colombia's ability to enhance its coffee exports could limit the availability of beans in the domestic market, leading to an increase in local prices. Vietnamese coffee prices are forecasted to rise, driven by potential weather concerns associated with the El Niño phenomenon.

The impact of weather events on coffee-producing regions underscores the interconnectedness of global coffee markets, as disruptions in one region can reverberate across the supply chain. This has also presented opportunities for major coffee-supplying countries currently unaffected by adverse weather, such as India. Traditionally renowned for its tea production, India is carving a niche in the global coffee market. The Coffee Exporters’ Association of India anticipates a significant uptick in coffee exports in 2024 to 298,000 metric tons (mt) from 271,420 mt during the previous year, a 10% increase.

Figure 1:Indian Coffee Exports

Source:ITC Trade Map, Coffee Exporters’ Association of India, Tridge

This surge in Indian coffee exports is attributed to a rally in global prices, prompting European buyers to pay premiums. India's unique cultivation practices, characterized by shade-grown, hand-picked, and sun-dried methods, contribute to the premium quality of its coffee. In the current scenario, the premiums are even higher due to a production shortfall, making Indian Robusta cherries particularly sought after, with a premium of nearly USD 300/mt over London futures (LRCc2).

Italy, Germany, and Belgium stand out as major importers of Indian coffee, receiving three-quarters of the country's exports. The trade relationship is poised to strengthen further, with projections indicating a significant increase in shipments to these destinations in 2024. Tridge's import data provides insights into the evolving coffee trade dynamics. Between 2018 and 2022, there has been a noteworthy increase in coffee imports of Italy, Germany, and Belgium. Italy recorded a substantial growth of 49.1%, highlighting a growing demand for Indian coffee in the Italian market. Similarly, Germany experienced a notable increase of 56.2% in coffee imports, while Belgium, another key destination, saw a robust growth of 48.3%.

Figure 2:Coffee Imports (HS Code: 0901)

Source: Tridge

In light of adverse weather conditions impacting coffee crops in major producing countries like Vietnam and Colombia, accurate weather forecasting becomes a crucial tool for suppliers to strategize for the upcoming season. Tridge's weather data emerges as a valuable resource, providing a comprehensive view of weather conditions from a bird's-eye perspective. For coffee suppliers, having access to reliable weather data is instrumental in making informed decisions. By leveraging Tridge's weather data, suppliers can gain visibility into current conditions and forecast trends that might influence coffee production. This insight is particularly critical in the agricultural sector, where climate variations can significantly impact crop yields. From a buyer's perspective, Tridge's weather data offers a direct analysis of the weather conditions in coffee-supplying markets. This enables buyers to make more informed decisions based on the prevailing climate factors. Understanding the weather conditions in the regions of interest allows buyers to assess the potential impact on crop quality, quantity, and overall market dynamics.

As India continues to assert itself as a significant player in the global coffee trade, exporters and stakeholders can leverage Tridge solutions to explore new opportunities and establish lasting partnerships in these key importing nations. The January 2024 Outlook Report serves as a valuable resource, providing insights and forecasts to empower industry participants in making informed decisions. Additionally, the insights provided by Tridge's import, weather, and price data offer valuable information for market participants seeking to navigate and capitalize on the evolving dynamics of the coffee industry.

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