In W21 in the coffee landscape, On Monday, May 22, following the USDA's forecast that Colombia's coffee production will rise by 2% to 11.6M bags in 2023/24, the July/23 contract for Arabica fell 280 points, trading at 189.20 cents/lbp. On May 23, the price continued to decline, reaching 187.45 cents/lbp due to pressure from favourable weather that pushed back Brazil's harvest. In contrast, the July/23 contract was up 55 points and trading at 188 cents/lbp on May 24 as ICE Arabica coffee stockpiles had been continuously declining for the previous three months and reached a 5-and-a-half-month low on Tuesday of 620,633 bags. On May 25th, the Brazilian real's decline weighed on the price of Arabica, causing the July/23 contract to close with a loss of 530 points and be quoted at 182.70 cents/lbp.
The production of Robusta coffee is more at risk from the El Niño weather pattern, which most forecasters expect to develop globally in the second half of 2023. the world's two largest producers of Robusta, Vietnam, and Brazil, could experience yield reductions if a significant El Niño occurs. Conab increased Brazil's Arabica production forecast for the 2023/24 season to 37.93M bags, an addition of 494K bags compared to the previous report, due to higher yields, especially in the Cerrado, São Paulo, and southern Minas Gerais regions. However, a loss of 695K bags, or 8% YoY, is anticipated for Robusta, bringing the number of bags to 16.81M bags. This was driven entirely by a 1.78M bag YoY drop in the forecast in Espírito Santo. Although there is an increased forecast for Robusta in Bahia by 142k bags YoY and in Rondônia by 331K bags, it is not enough to offset the problems from the main Robusta supplying region.
According to the USDA, coffee production in Vietnam, the world's second-largest producer after Brazil, has been lowered by 6% YoY for 2022/23 (October–September) to 29.75M 60kg bags due to reduced yields, higher production costs, and a reduction in the growing area. However, the USDA anticipates a recovery in the upcoming 2023/24 season, with an estimated increase in production of roughly 5%, or 31.3M bags, due to favourable weather and a greater yield. Uganda is Africa's biggest coffee exporter, followed by Ethiopia, and mainly grows the Robusta variety. Uganda’s coffee exports fell 8% MoM in April to 373,610 60kg bags due to the preceding drought and the 7% MoM decrease in exports to Sudan in April as conflict broke out in the country on April 15. Indonesia's coffee production in 2023/24 is expected to reach 9.7M 60kg bags, a drop of 18.5% compared to 11.9M bags in the 2022/23 season as heavy rains disrupted the development of cherry-stage beans in major producing regions, thus reducing coffee quality. Arabica production in Indonesia is projected to fall to 1.30M bags in 2023/24 from 1.40M bags in 2022/23 while Robusta production is projected to decrease by 20% from 10.5M bags to 8.4M bags. Meanwhile, coffee exports from Indonesia are projected at 5.2M bags in 2023/24, down 32% from 7.7M bags in 2022/23. The EU has officially enacted the Anti-Deforestation Law as of May 16, 2023, which primarily impacts palm oil, cattle, lumber, coffee, cocoa, and rubber.
The revised estimate of Colombian coffee production for the 2022/23 season is 11.3M bags, a 10.3% decrease from the USDA's official forecast of 12.6M bags due to excessive rains and cloudiness from the La Niña weather phenomena that extended longer than expected. Colombian coffee production in 2023/24 is forecast to increase by about 3% up to 11.6M bags of green bean equivalent (GBE) coffee driven by improving weather conditions. Similarly, a 2% increase in coffee exports is anticipated, due to recovering production and producers prioritising exports. Lastly, Ibo Island in Mozambique has 30,327 coffee trees and is expected to produce 4MT of coffee in 2023 after sowing 33.4 hectares of coffee with a 67% completion rate.
