1.Weekly News

Vietnam

Stabled Coffee Futures Prices on May 26, 2024

On May 26, 2024, Robusta coffee bean prices on the London Exchange for delivery in Jul-24 held steady at USD 3,892 per metric ton (mt), while the price for Sep-24 delivery remained unchanged at USD 3,806/mt. On the New York Exchange, Arabica prices for delivery in Jul-24 remained stable at USD 2.18 per pound (lb), with Sep-24 delivery futures set at USD 2.16/lb. In Vietnam, domestic coffee prices on May 26, 2024, were trading at USD 4.47 to 4.52 per kilogram (kg).

Brazil

Positive Outlook for Brazil's 2024/25 Coffee Crop as Harvest Rate Increases

According to Safras & Mercado, a leading agribusiness consultancy in Latin America, 15% of Brazil's 2024/25 coffee crop has been harvested as of May 21, 2024. This represents an increase compared to 12% in the same period of the previous year. The dry climate has favored the coffee harvest in the country, especially for canephora coffee (Robusta/Conilon). Notably, the current season's 15% harvest rate aligns with the last five years' average.

Strong Growth in Brazilian Coffee Exports Despite Logistical Challenges

Despite ongoing logistical challenges, Brazil continues to demonstrate a strong pace of coffee exports. In Apr-24, 4.2 million 60-kg bags of coffee were shipped abroad, representing an impressive 53% year-on-year (YoY) increase. The cumulative exports in the first four months of 2024 reached 16.2 million bags, marking a substantial 46% YoY growth. In particular, the exports of coffee (Robusta) reached 677 thousand bags in Apr-24, and the cumulative exports reached 2.6 million bags, a 548% YoY increase. Similarly, Arabica coffee also demonstrated strong performance, with 12.5 million bags exported in the first four months of 2024, representing a 31% increase compared to the previous year. In the first nine months of MY 2023/24, Ethiopia's coffee exports reached 174.6 thousand mt, with an expected export value of USD 1.75 billion for the season. The main destinations for Ethiopian coffee are Saudi Arabia, South Korea, the United States (US), Germany, Japan, and China.

Guatemala

China's Alleged Restrictions on Guatemalan Coffee and Cardamom

The Guatemalan Association of Exporters (AGEXPORT) reported a potential trade ban by China on Guatemalan coffee and cardamom shipments, potentially in response to Guatemala's diplomatic support for Taiwan. Despite no official announcements from China, traders have ceased shipments, and AGEXPORT awaits confirmation of the alleged ban. This situation occurs amidst increasing Chinese pressure to shift allegiances from Taiwan, with only twelve countries, including Guatemala, still maintaining diplomatic ties. The economic impact includes a significant imbalance in trade favoring China despite the lack of a formal trade agreement between the two nations. China's Foreign Ministry has criticized Guatemala's actions and urged alignment with its 'one China' policy.

Indonesia

Indonesia's Coffee Production Expected to Rebound in 2024/25

According to the United States Department of Agriculture (USDA), Indonesia's coffee production is expected to make a significant recovery to 10.9 million 60-kg bags in the 2024/25 marketing year (MY) after a difficult period in 2023/24 due to the adverse impacts of the El Niño weather phenomenon. However, the harvest will likely be delayed as the plants are still recovering from last season's severe drought. The harvest is expected to begin in May or June rather than the traditional March or April. Indonesia's green coffee exports are projected to reach 6 million bags in 2024/25, compared to 4.28 million bags in the previous season, reflecting the expected recovery in production.

Ethiopia

Coffee Exports in Ethiopia Reached 174.6 thousand mt in the First Nine Months of MY 2023/24

According to the Ethiopian Coffee and Tea Authority (ECTA), Ethiopia's coffee exports reached 174.6 thousand mt, valued at USD 835.2 million in the first nine months of MY 2023/24. The export value in the 2023/24 season is expected to reach USD 1.75 billion compared to USD 1.3 billion in the 2022/23 season. The main destinations for Ethiopian coffee are Saudi Arabia, South Korea, the US, Germany, Japan, and China. Notaly, Ethiopia has successfully expanded its market to include new importers such as the United Arab Emirates (UAE), Sudan, and China, which were previously absent from the list of trading partners.

2.Weekly Pricing

Weekly Coffee Pricing Important Exporters (USD/kg)

Yearly Change in Coffee Pricing Important Exporters (W21 2023 to W21 2024)

Brazil

Brazil’s coffee prices increased by 1.11% week-on-week (WoW) to USD 6.35/kg in W21 compared to USD 6.28/kg in W20. Based on the monthly comparison, the prices declined slightly by 0.16% month-on-month (MoM). This recent price increase can be attributed to strong export demand and concerns about the potential supply shortage of Robusta coffee in Vietnam due to dry weather.

Colombia

Coffee prices in Colombia decreased to USD 7.86, a 12.37% WoW, and a 2.24% MoM decrease. However, compared to 2023, the price increased by 9.78% YoY. TheForeign Agricultural Service (FAS)Bogotá forecasts that Colombian coffee production for the market year (MY) 2024/2025 will increase to 12.4 million bags, a 1.6% rise from the previous year, owing to favorable weather conditions and improved flowering. Despite this increase, production challenges persist, such as reduced coffee tree renovation areas, young tree vulnerability to drought, and coffee borer outbreaks in lower altitudes. Domestic coffee prices are pressured by lower international prices and currency revaluation. To combat higher production costs, producers are focusing on high-quality specialty coffee to secure better market prices.

Vietnam

Coffee prices in Vietnam increased significantly by 8.1% WoW to USD 4.27/kg in W21; however, based on monthly compassion, the prices declined by 15.61% MoM. The price increase is primarily attributed to a supply shortage of the Robusta variety caused by dry weather. On May 22, 2024, Robusta coffee futures reached a three-week high. Furthermore, due to the limited supply, coffee farmers in Vietnam are hesitant to sell and are waiting for prices to increase further.

3. Actionable Recommendations

Optimize Inventory Levels

Coffee traders and importers must adopt strategic stock management practices to mitigate the impact of supply chain disruptions. This includes maintaining optimal inventory levels, diversifying supplier bases, and implementing effective procurement strategies.

Encourage Certification Programs

Encouraging coffee producers to participate in sustainable certification programs (e.g., Fair Trade, Rainforest Alliance) can enhance marketability and access to premium markets. Certification ensures compliance with sustainable practices, which can attract environmentally conscious consumers and buyers.

Negotiate Trade Agreements

Governments and industry associations should work on negotiating favorable trade agreements and resolving trade disputes to ensure stable and predictable market access for coffee exports. Strengthening diplomatic ties and trade relations with crucial importing countries can provide a stable export environment.

Sources: Tridge