1. Weekly News

Brazil

Brazil’s Coffee Shipments in Aug-24 and Early Sep-24

In Aug-24, Brazil shipped a total of 3.73 million 60-kilogram (kg) bags of coffee, which includes 2.49 million 60-kg bags of Arabica, 924.68 thousand 60-kg bags of Canephora, 318.16 thousand 60-kg bags of soluble coffee, and 3,003 60-kg bags of roasted coffee. As of September 13, 2024, Brazil’s coffee shipments for the month had reached 1.12 million 60-kg bags, including 819.75 thousand 60-kg bags of Arabica, 216.91 thousand 60-kg bags of Canephora, and 85.23 thousand 60-kg bags of soluble coffee. Brazil’s strong export performance continues into Sep-24 due to solid demand, with Arabica coffee leading the shipments.

IBGE Lowered Brazil's 2024/25 Coffee Harvest Forecast

The Brazilian Institute of Geography and Statistics (IBGE) lowered its estimate for Brazil's 2024/25 coffee harvest due to low soil moisture levels caused by a lack of rain in recent years. The forecasted output is 59.7 million 60-kg bags, which is a 1.6% decrease from the previous estimate but still 4.8% higher than the harvest in the 2023/24 season. Arabica coffee production is expected to increase by 6.5% year-on-year (YoY), reaching 42 million 60-kg bags. However, Robusta production is forecasted to decline by 4.4% YoY to 17.7 million 60-kg bags due to decreased cultivation area and yields.

Japan

Japan's Coffee Inventory Declines Amid Stabilizing Demand

According to the Japan Coffee Association (JCA), Japan’s coffee inventory decreased by 3.3% in Jul-24 to 2.42 million 60-kg bags from May-24. The inventories are comparable to the same period in the 2022/23 season but remained below the historical average of 2.8 million 60-kg bags. Since 2022, Japan’s coffee demand has declined, especially between 2022 and 2023. However, the 2023/24 season (Oct-23 to Jun-24) consumption has stabilized, with an accumulated volume of around 4.7 million 60-kg bags, similar to the 2022/23 season.

Peru

Peru's Coffee Exports Soared in Aug-24

In Aug-24, Peru’s coffee exports reached 40.24 thousand metric tons (mt), valued at USD 302 million, reflecting a 57% YoY increase in volume and a 195% YoY rise in value. This growth was accompanied by an 87% YoY increase in average price, reaching USD 7,510/mt. The strong performance of Peruvian coffee is attributed to declining production expectations in Brazil and reduced export availability from Vietnam, creating favorable conditions for Peru’s coffee exports.

Peru's Coffee Production Faces Various Challenges

Peru's coffee industry faces several challenges, including forest fires, water stress, and the rust fungus disease, which is expected to threaten its coffee production in 2025. The fires, especially in the Amazon region, have negatively affected the country’s coffee crops and highlighted the lack of proper harvest planning. The ongoing drought is expected to impact production in the medium term further. There is a growing need to modernize agricultural practices. The industry has called the Ministry of Agrarian Development and Irrigation (MINAGRI) to implement a plan to increase crop yields through technical irrigation.

2. Weekly Pricing

Weekly Coffee Pricing Important Exporters (USD/kg)

Yearly Change in Coffee Pricing Important Exporters (W38 2023 to W38 2024)

Brazil

In W38, coffee prices in Brazil increased by 2.71% week-on-week (WoW) to USD 6.83/kg, marking a 7.22% month-on-month (MoM) spike and a 19.61% YoY rise. This price surge is primarily driven by a significant increase in global coffee futures, as severe drought conditions in Brazil have reduced production for the 2024/25 season. Since Apr-24, rainfall in Brazil's Arabica-growing regions has been consistently below average. This challenge coincides with other global supply chain disruptions, including port congestion, a worldwide container shortage, disruptions to the Red Sea shipping route, and reduced harvests in Vietnam, further tightening the coffee market.

Colombia

In W38, Colombia’s coffee prices rebounded after weeks of decline, reaching USD 7.48/kg, a 1.22% WoW increase. However, MoM and YoY prices remain lower than previous periods, with a 2.48% MoM drop and a 6.38% YoY decrease. This weekly price recovery aligns with rising global coffee futures prices, supported by supply shortages in Brazil and Vietnam. In addition, international coffee prices are expected to climb further due to increasing energy costs for roasting, ongoing trade disruptions, and the introduction of the European Union Deforestation Regulation (EUDR).

Vietnam

In W38, Vietnam’s coffee prices increased by 3.29% WoW to USD 5.86/kg, following a 3.51% MoM rise. The price trend has remained upward since W36 due to low output and inventory levels. In addition, Typhoon Yagi has exacerbated the situation, causing coffee berries to fall prematurely, reducing quality, and disrupting drying operations. The La Niña weather pattern may lead to wetter-than-usual conditions in the coming months, further impacting production. Additionally, global demand, particularly in the European Union (EU), United States (US), and Japan, for high-quality Arabica coffee continues to exceed supply, adding further pressure to the market.

3.Actionable Recommendations

Address Production Challenges

Due to drought and reduced production forecasts, Brazil's coffee sector faces significant challenges. To mitigate these issues, stakeholders should prioritize investment in water management and irrigation technologies to improve soil moisture levels. Implementing better harvest planning strategies and investing in research for drought-resistant coffee varieties will also help enhance resilience against future climate impacts.

Manage Coffee Inventory and Demand

As Japan's coffee inventory has declined, the JCA must work with importers and retailers to monitor demand closely. Establishing strategic partnerships with coffee-producing countries to secure high-quality coffee supplies will help maintain market stability. Promoting local coffee consumption through marketing campaigns can also help sustain demand in the face of inventory challenges.

Mitigate Climate and Supply Chain Impacts

Given the impacts of Typhoon Yagi and potential wetter conditions due to the La Niña pattern, Vietnamese coffee farmers should adopt adaptive agricultural practices that enhance resilience against climate variability. The government can support this transition by providing financial assistance for infrastructure improvements and research into climate-resilient coffee varieties. Strengthening logistics and supply chain management will also help minimize coffee production and export disruptions.

Sources: Tridge, CafePoint, Vinanet, Agraria, Apnoticias