1. Weekly News

Global

Coffee Prices Hit Record Highs Due to Supply Shortages

Global coffee prices reached an all-time high in Dec-24, primarily driven by adverse weather conditions in key coffee-producing countries like Brazil and Vietnam. Brazil faced wildfires and droughts, especially in São Paulo, which damaged coffee crops, while Vietnam experienced severe droughts and typhoons, further reducing supply. Also, Brazil's low soil moisture levels affected coffee trees' flowering, contributing to a diminished harvest. Rising global coffee consumption, especially in markets like China, has intensified pressure on supply chains that are recovering from pandemic disruptions. As a result, coffee prices remain elevated amidst these supply challenges.

Malaysia

Malaysian Cafes Face Rising Coffee Bean Costs Amid Record Price Surge

Malaysian cafe owners grapple with soaring coffee bean prices, driven by adverse weather conditions and high global demand. Arabica and Robusta beans, sourced primarily from Brazil and Vietnam, have seen significant price hikes, with Arabica reaching its highest price since 1977 at approximately USD 3.50 per pound (lb). With these record-high costs, cafe owners in Kuala Lumpur are rethinking their pricing strategies. While some opt to roast beans in-house to save costs, others are preparing to raise prices to maintain profitability. Despite the challenges, business owners are confident that coffee will remain a staple in customers' lifestyles, and some are exploring the potential of Malaysia's local coffee industry to lessen reliance on imports.

Vietnam

Vietnam's Coffee Exports to the UK Surge Despite Decrease in Supply

Vietnam's coffee exports to the United Kingdom (UK) have grown significantly, with the average export price rising 68.4% to USD 3,941 per ton in 2024. In June, exports reached 2.18 thousand tons, valued at USD 9.1 million, though volumes dropped 44.6% compared to the previous year. Despite a 22.8% decrease in total volume for the first half of 2024, the value of coffee exports grew by 29.9%. Vietnam maintains its position as the second-largest coffee supplier to the UK, though its market share has declined, while Brazil's share has grown significantly. This presents challenges and opportunities for Vietnam's coffee industry to enhance quality, marketing, and market expansion efforts.

2. Weekly Pricing

Weekly Coffee Pricing Important Exporters (USD/kg)

Yearly Change in Coffee Pricing Important Exporters (W1 2024 to W1 2025)

Brazil

The coffee price in Brazil has remained stable week-over-week (WoW) at USD 7.70 per kilogram (kg) in W1. However, the month-over-month (MoM) price increased 6.94%, and the year-over-year (YoY) price surged by 27.69%. The price spike is primarily attributed to severe droughts in Minas Gerais, which significantly reduce rainfall and affect coffee production. This has been compounded by similar weather disruptions in other coffee-producing countries, regions in Brazil, and other countries, contributing to global supply shortages. As a result, the 2025/26 crop year is expected to see a 15% decline in Arabica output, further tightening supply and sustaining high prices. The supply shortages will continue to influence high pricing in 2025.

Colombia

Colombian coffee prices have experienced slight declines in the past weeks, with W1 of 2025 showing a cost of USD 7.20/kg, a decrease of 1.37% WoW, and a 2.04% MoM drop. These drops follow a period of relative stability in W50 to W52 of 2024. On a YoY basis, prices have decreased by 11.55%, primarily due to a significant 20% increase in Colombia's coffee output in 2024. Favorable weather conditions and improved yields have driven this production boost, providing more excellent supply and exerting downward pressure on prices. Despite the increased output in Colombia, the global coffee supply remains constrained, which could influence pricing in the upcoming weeks. As demand for Colombian coffee rises, the market may face upward pricing pressure shortly, depending on the balance between supply and demand.

Vietnam

Vietnam's coffee prices have shown relative stability in the past weeks, with W1 recording a cost of USD 4.73/kg, marking a slight decline of 0.63% WoW and 1.87% MoM drop. These tiny drops come after a series of price increases in the preceding weeks and appear as part of a broader market stabilization effort. The stabilizing price movement reflects the adjustment following previous upward trends. Additionally, Vietnam's coffee production is forecasted to increase in the 2024/25 season to 30.1 million 60-kg bags, up from 27.5 million in the 2023/24 season. This production increase contributes to the price drops and overall stabilization in the market, as the additional supply helps to balance out potential supply shortages.

3. Actionable Recommendations

Leverage Global Supply Shortages

As global coffee prices hit record highs due to supply shortages from Brazil and Vietnam, stakeholders should explore hedging strategies and forward contracting to secure favorable prices. This is particularly important for buyers in countries where coffee beans' rising costs may continue to pressure cafes and coffee imports.

Expand Production Capacity in Vietnam

With Vietnam's coffee production forecasted to increase, suppliers can seize this opportunity to boost exports, especially to markets like the UK, where the demand for coffee is rising despite a decrease in volume. The stabilizing market in Vietnam presents an opportunity for manufacturers to refine supply chains and enhance product offerings with a focus on quality and consistency.

Invest in Local Coffee Industries

In Malaysia, where cafes face rising coffee bean costs, exploring opportunities to invest in or source from the growing local coffee industry can help mitigate reliance on expensive imports. Moreover, Malaysia's growing interest in supporting local coffee production offers financial and strategic benefits in reducing vulnerability to global price fluctuations.

Sources: Tridge, Agro Gov VN, Euro News, France 24, Mercado do Cacau, Noticias Agricolas, The Edge, WTO Center