1. Weekly News

Global

Global Coffee Prices Surge due to Production Concerns in Brazil and Vietnam

Coffee prices are reaching new heights globally due to unfavorable weather conditions and supply shortages from leading producers Brazil and Vietnam, alongside shipping congestion and a weakening United States (US) dollar. Brazil's coffee output for the 2024/25 crop year is projected at 63 million 60-kilogram (kg) bags, a decrease from the previous year. Vietnam's production is also expected to drop, contributing to a potential global coffee deficit for the fourth consecutive year. Despite falling export volumes from Vietnam, rising prices have significantly driven export value. Forecasts indicate coffee prices will remain high for the next five years due to ongoing production challenges post-COVID-19.

Brazil

Record Coffee Exports Boost Brazil’s Revenue in Sep-24

In Sep-24, Brazil exported 4.5 million 60-kg coffee bags, marking a record for the month and a 33.3% increase year-on-year (YoY). Arabica coffee accounted for 71.6% of the volume, with Robusta and soluble coffee comprising the remainder. Revenue reached a historic USD 1.19 billion, up 84.5% YoY, driven by a 38.4% rise in the average price per bag. From Jan-24 to Sep-24, Brazil exported 36.42 million 60-kg bags, generating USD 8.45 billion. Differentiated coffee exports grew by 51.6%, reflecting a shift towards higher-value, sustainably-certified coffee. Key export markets included the US, Germany, and Belgium.

Brazil's Coffee Exports Face Major Logistical Hurdles Despite Record Volumes

Brazilian coffee exporters encountered severe logistical challenges in 2024, with 2.155 million bags of coffee, equivalent to 6,529 containers, remaining undelivered by Sep-24, costing USD 580.55 million in lost revenue. Inadequate port infrastructure and frequent changes in shipping schedules were key contributors, with the Port of Santos experiencing 38-day delays for 84% of its ships. Despite these obstacles, Brazil exported a record 4.5 million bags in September. The Council of Coffee Exporters of Brazil (Cecafé) continues working with the government and private sector to address these logistical bottlenecks.

China

China's Coffee Craze Fuels Brazilian Exports

China's coffee consumption has surged dramatically over the past decade, rising from 300 thousand 60-kg bags in 2009 to 6 million in 2023, driven primarily by younger consumers who view coffee as a trendy lifestyle choice. This burgeoning interest has led to a 275% increase in Brazilian coffee exports to China in 2023, propelling China to the sixth position among Brazil's top coffee importers. The rapid expansion of coffee shops, especially Luckin Coffee, which sources approximately 50% of its beans from Brazil, has been pivotal in this growth. Interestingly, while Chinese coffee culture blends the beverage with ingredients like coconut milk and traditional liquor, per capita consumption remains low at 260 grams (g) compared to Brazil's 6.4 kg, indicating significant potential for further growth in Brazilian coffee exports to China.

China Becomes Colombia's Second-Largest Coffee Export Destination in Q1-2024

In the first quarter (Q1) of 2024, China has emerged as the second-largest export destination for Colombian coffee, following the US, according to recent statistics from Colombia's National Federation of Coffee Growers (FNC), the National Statistics Department (DANE), and the Customs and Tax Authority (DIAN). This growth is fueled by increasing coffee demand in China, which presents significant opportunities for Colombian exporters.

East Africa

East African Coffee Producers Set to Benefit from Brazil's Drought

East African coffee producers are poised for increased profits as Brazil faces a worsening drought threatening its coffee output, particularly for the 2025/26 Arabica crop. Rainfall in Brazil has been below average since April, damaging coffee trees during the critical flowering stage. As global supply tightens, coffee demand from Kenya, Uganda, and Ethiopia is expected to surge, driving prices higher; for instance, a 50-kg bag of Kenyan coffee recently sold for USD 256, up 6.2% from USD 241. Inventories monitored by ICE have also declined, with Arabica stocks at a four-month low of 795,874 bags. Ethiopia and Uganda are well-positioned to capitalize on the situation; Ethiopia earned a record USD 1.43 billion from coffee exports in the 2023/24 fiscal year, while Uganda reported its highest foreign exchange earnings from coffee exports in 30 years, totaling approximately USD 1.6 billion. With Brazil's output likely to decrease further, East African exporters are set to benefit from growing demand, potentially boosting revenues across the region significantly.

India

55% Surge in Indian Coffee Exports in H1-2024

India's coffee exports soared by 55% in the first half (H1) of 2024, reaching USD 932.6 million (INR 77.7 billion) compared to USD 594.72 million (INR 49.56 billion) last year. Export volume also rose by 15%, with 220 thousand metric tons (mt) shipped from Apr-24 to Sep-24, driven by rising international prices. Indian coffee beans now fetch USD 4.19/kg (INR 352/kg), up from USD 3.08/kg (INR 259/kg). Italy, Germany, Russia, the United Arab Emirates (UAE), and Belgium are the top importers, while Karnataka, Kerala, and Tamil Nadu dominate production. This trend reflects India's growing stature in the global coffee market.

Indonesia

Indonesia's Coffee Exports Surge to 342,220 Tons in 2024

Indonesia's coffee exports reached 342.22 thousand tons between Jan-24 and Sep-24, generating USD 1.49 billion in value, reflecting rising global demand for quality coffee. The Deputy Minister of Trade emphasized the government's commitment to strengthening the sustainable coffee export ecosystem through partnerships with businesses and international trading partners. Efforts include 38 completed trade negotiations and targeting non-traditional markets. Despite global recession risks, experts remain optimistic about maintaining export momentum through innovation and digitalization, positioning Indonesia as a critical player in the international coffee market.

Peru

Peru Hosts Congress to Boost Coffee Quality and Sustainability

During the "Congreso de Cafés Especiales," held at Expocafé Cajamarca 2024, Peru and Chile specialists evaluated methods to improve coffee quality. Organized by the Ministry of Agrarian Development and Irrigation (Midagri) through the National Institute of Agrarian Innovation (INIA), the event focused on sustainable coffee production and innovations in the value chain. Topics included genetic improvement, pest-resistant varieties, and climate adaptation. Held in San Ignacio, Cajamarca, the event targeted coffee producers, researchers, and entrepreneurs. Peru produces coffee across 350 thousand hectares (ha), with Cajamarca, San Martín, and Junín as leading regions and the US as the primary export market.

Vietnam

Record High Coffee Export Values in Vietnam Amid Declining Output

Despite declining output, Vietnam's coffee export value reached unprecedented levels during the 2023/24 crop year. The Vietnam Coffee-Cocoa Association (Vicofa) reported that businesses exported 1.46 million tons of coffee, generating nearly USD 5.43 billion, which reflects a 12.1% decrease in volume but a 33.1% increase in value compared to the previous crop year. This surge in export value is primarily attributed to soaring coffee prices, with the average export price reaching USD 3,673 per ton, nearly 50% higher than the 2022/23 crop year. Notably, the average export price in Sep-23 hit a record USD 5,760/ton. Despite the challenges posed by a consistent decline in output since the COVID-19 pandemic, with a loss of approximately 280 thousand tons compared to the 2021/22 crop year, Europe remains Vietnam's largest coffee market, accounting for over 38% of total exports. Robusta coffee continues to dominate exports, while Arabica and decaffeinated coffee beans contribute significantly less to turnover.

Bayer Vietnam and Partners Launch Initiative to Support Coffee and Durian Farmers

In collaboration with the National Agricultural Extension Center and international partners, life science company Bayer Vietnam has launched the Better Life Farming (BLF) project to support coffee and durian farmers in Vietnam's Central Highlands. The project aligns with Vietnam's national strategy to develop critical crops to improve sustainability, productivity, and export quality. The initiative provides innovative agricultural solutions, such as the "Bountiful Harvest" suite, addressing challenges like pests, diseases, and water scarcity. It also offers agronomic consulting and fosters collaboration among farmers, businesses, and government to enhance socio-economic development.

2. Weekly Pricing

Weekly Coffee Pricing Important Exporters (USD/kg)

Yearly Change in Coffee Pricing Important Exporters (W42 2023 to W42 2024)

Brazil

In W42, Brazilian coffee pricing dropped to USD 6.87/kg, reflecting a 0.58% decline week-on-week (WoW) from USD 6.91/kg and a 1.86% drop month-on-month (MoM) from USD 7.00/kg. This decrease is primarily due to the Brazilian real (BRL) depreciation against the USD, despite local prices being slightly higher in BRL. However, compared to the previous year, prices are up 22.46% as Brazil faces significant droughts in key coffee-producing regions, impacting supply. In addition, Brazil is facing logistical hurdles in exports, delaying shipments. The 2024/25 crop year is projected to yield only 63 million 60-kg bags, indicating a further decline in supply and suggesting that prices will remain elevated.

Colombia

In W42, Colombian coffee pricing fell to USD 7.41/kg, marking a 2.63% decline WoW from USD 7.61/kg, a 3.01% decrease MoM from USD 7.64/kg, and YoY drop of 1.07%. These drops reflect lower USD pricing due to recent exchange rate fluctuations, even though higher prices in Colombian pesos (COP) are evident in the compared weeks. Ongoing weather disruptions, particularly drought conditions, have adversely affected coffee production locally and globally, tightening supply. As these production challenges continue, there is potential for prices to increase shortly, highlighting the uncertainty in the Colombian coffee market.

Vietnam

In W42, Vietnamese coffee pricing dropped to USD 4.54/kg, marking a 0.66% decline WoW from USD 4.57/kg and a 6.20% decrease MoM from USD 4.73/kg. This price drop occurs despite Vietnam facing a supply reduction due to unfavorable weather conditions. While export values have reached unprecedented levels during the 2023/24 crop year, there has been a notable decrease in export volume. Ongoing supply shortages and adverse weather have not led to higher prices in recent weeks due to a decline in international export demand and increased imports that have stabilized the domestic market. The current pricing volatility is uncertain, as prices might grow in the upcoming weeks due to continued unfavorable weather impacting production.

3. Actionable Recommendations

Explore Export Opportunities in China

As coffee demand continues to rise in China, producers and exporters should consider expanding export operations to this market. They should focus on marketing local coffees to leverage the popularity of coffee culture among younger consumers. They should also create unique and high-quality specialty coffee products tailored to the Chinese market's tastes. Producers should incorporate local ingredients and flavors to enhance the appeal, positioning these offerings as premium choices for China's growing coffee consumer base.

Implement Sustainable Coffee Practices and Certifications

To enhance sustainability in coffee production, exporters should focus on acquiring certifications for ethically sourced and environmentally friendly coffee, such as Fair Trade, Rainforest Alliance, or organic certifications. This approach aligns with global consumer trends favoring sustainable products and positions producers to capitalize on the growing demand for high-quality differentiated coffee. For instance, Brazil's recent surge in differentiated coffee exports underscores the financial benefits of sustainable practices. Additionally, partnerships with initiatives like Bayer Vietnam's Better Life Farming project can provide valuable resources and training for implementing sustainable agricultural practices and addressing issues such as pests and water scarcity. By emphasizing these sustainable practices in marketing efforts, coffee producers can attract environmentally conscious consumers, bolster their market reputation, and ultimately secure higher price points in existing and emerging markets.

Leverage Brazil's Coffee Surplus Through Alternative Logistics

Latin American coffee importers should consider Brazil as a supplier, especially given the current logistical bottlenecks at its ports. With 2.155 million bags of coffee undelivered due to infrastructure issues at ports like Santos, there is an opportunity to source high-quality Brazilian coffee through alternative routes. Importers can explore land-based transport solutions, utilizing road and rail networks to circumvent the port delays. This strategy ensures access to Brazil's unexported coffee and allows buyers to secure competitive prices before global shortages further escalate. Collaborating with logistics partners in Brazil can streamline this process, ensuring a steady supply while capitalizing on Brazil's record export volumes.

Sources: Tridge, 24H, All Africa, Café Point, Danviet, El Peruano, Embrapa, Food Mate, G1, Industri Kontan, Noticias Agricolas BR, Portal Do Agronegocio, Warta Ekonomi, WTO Center