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Trade4go
Dec 20th, 2024
Original content
Global coffee prices are expected to rise sharply in 2025 due to unfavorable weather conditions in key coffee-producing countries. Brazil, the world's largest coffee producer, is facing a drought that is impacting its Arabica coffee supply, a variety that accounts for 70% of global production. Meanwhile, storms and limited rainfall in Vietnam, the leading producer of Robusta coffee, are also expected to reduce harvests. As a result, coffee prices could increase by 20 to 25%, especially in Russia and Germany, where import dependencies and fluctuations in exchange rates are driving up costs. Prices in Germany could rise by at least 30%, with organic coffee seeing even higher price hikes.
Conilon coffee producers from Espírito Santo, Brazil, are celebrating a historic achievement as they export high-quality conilon beans for the first time to India, a country traditionally known for its tea culture. Led by the Cooperativa Agrária dos Cafeicultores de São Gabriel, this export involves 21 containers of Conilon coffee, with shipments starting in July and continuing into 2025. Experts believe the success reflects the region's commitment to quality, opening doors to new international markets. The growing coffee consumption in India, influenced by changing habits and increased interest in coffee shops, makes this export particularly timely. Despite logistical challenges in Brazilian ports, importing Conilon coffee from Espírito Santo is part of a broader trend of record exports, with Robusta coffees showing substantial growth in 2024. The state is Brazil's largest Conilon producer, contributing significantly to national and global coffee markets.
Brazil is grappling with severe droughts in Minas Gerais, with rainfall dropping by up to 50% below normal levels, threatening both national and global coffee supply. In response, irrigation technologies, particularly drip irrigation, are being adopted to mitigate the impact of water shortages. These systems, developed by Rivulis and Gota Azul, help increase coffee productivity by up to 55% per hectare (ha), ensuring consistent water supply during critical growing stages. This innovation also supports the production of specialty coffees, which can fetch higher prices, improving both yield and quality. Integrating advanced irrigation technologies is crucial for maintaining Brazil's competitiveness in the global coffee market.
By Nov-24, Brazil's coffee exports reached a record high of USD 11.3 billion, a 22.3% increase from 2022 and a 56% rise from 2023. The country exported 46.4 million 60-kilogram (kg) bags of coffee, a 32.2% increase from the previous year. Green coffee accounted for 91.9% of exports, with Arabica representing 79.7%. Industrialized coffee, including soluble and roasted varieties, also saw growth. Notably, specialty coffees with superior quality or sustainable certifications comprised 17.5% of total exports, generating 19.3% of total export revenue. These results reflect strong global demand for Brazilian coffee, driven by volume and quality.
Price reporting and research agency Expana forecasts a slight increase in Brazil's coffee harvest for 2025/26, predicting nearly 70 million 60-kg bags. A strong crop of Robusta and Conilon beans essentially drives this growth. However, the agency has downgraded its prediction for Arabica coffee by 2 million bags, reducing the forecast to 43 million due to adverse weather conditions early in the year. Despite this, favorable weather conditions since Oct-24 and good flowering and grain formation are expected to support the overall harvest.
Mozambique is crafting a strategy to enhance its coffee sector, improving competitiveness and gathering more accurate statistics for better planning and production. The plan will include investment in the coffee industry and address producers' requests for more transparent value chains. The strategy is backed by international support and aims to strengthen Mozambique's position in the global coffee market. With coffee grown mainly in Manica, Sofala, and Cabo Delgado, the country recently joined the International Coffee Organization (ICO), gaining access to technical assistance and new market opportunities. This initiative is supported by the United Nations Industrial Development Organization (UNIDO) and seeks to make Mozambique a key player in the global coffee industry.
Between Jan-24 and Oct-24, Peru's coffee exports reached USD 917 million, marking a 60.9% increase compared to the same period in 2023. This growth was driven by favorable international prices and a 51.1% increase in volume, totaling 209,700 tons. Coffee became Peru's third most important agricultural export product, after fresh blueberries and avocados, representing 9.8% of total agro exports. The United States (US), Germany, and Belgium were the top markets, while exports to Mexico and Russia saw dramatic growth. Despite strong performance in traditional markets, exports to Asian countries, particularly China, remain underdeveloped but are experiencing significant growth.
Retail coffee prices in major Russian stores have increased less than wholesale costs over the past year despite global price hikes caused by potential shortages, according to the head of the Retail Companies Association (AKORT). While coffee purchase prices rose by 20% due to weather conditions and inflation, retail price increases were limited to 10%. The demand for coffee remains strong, with a 3 to 4% rise in sales of whole-bean coffee and a 20% growth in ready-to-drink coffee, driven in part by the expansion of coffee points with baked goods in stores.
Vietnam, the world's largest exporter of Robusta coffee, saw a 14.3% decrease in export volume between Jan-24 and Nov-24, totaling 1.2 million metric tons (mmt). Despite the drop in exports, revenue from international sales rose significantly by 35.4%, reaching USD 4.9 billion, driven by higher commodity prices. November alone recorded a 49.1% decline in export volume compared to the same month in 2023 due to limited harvest and increased domestic demand. The results highlight the global value of Robusta coffee, which has balanced the country's trade in light of reduced supply, with experts forecasting a strong market in the coming months.
Vietnam's coffee production for the 2024/25 season is estimated at 30.1 million 60-kg bags, with 29 million bags of Robusta and 1.1 million bags of Arabica. This marks an increase from the 27.5 million bags produced in 2023/24. The rise in coffee prices has encouraged farmers to invest more in coffee cultivation, aiding recovery from early summer droughts and reducing losses. Coffee exports are also expected to recover, rising to 26.92 million bags, up from 24.4 million bags in the previous season, driven by improved production and higher demand.
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In W50, Brazil's coffee price was at USD 7.20/kg, reflecting a 9.09% increase week-on-week (WoW), a 4% decrease month-on-month (MoM), and a 20.81% rise year-on-year (YoY). The MoM drop can be attributed to market adjustments following a record high in W47. However, the WoW and YoY increases are primarily driven by significant factors in Brazil's coffee industry, including the historic export values and the opening of new markets. Additionally, Brazil is facing severe droughts, particularly in Minas Gerais, which have reduced rainfall and impacted coffee production. These developments have influenced the increasing market prices. The 2025/26 harvest is expected to increase, which might cause price drops in the upcoming season.
As of W50, Colombia's coffee price was USD 7.35/kg, showing a slight increase of 0.96% WoW, with no change MoM and an 8.13% YoY drop. The relative price stability on a WoW and MoM basis reflects a steady market, while the YoY decline is mainly attributed to a significant rise in Colombia's coffee production. In 2024, Colombia's output is expected to reach 13.6 million 60-kg bags, a 20% increase from 2023, driven by favorable weather conditions. This recovery follows three years of declining yields and signals higher productivity.
Vietnam's coffee price was USD 4.82/kg in W50, reflecting a 5.70% increase in WoW and a 7.83% rise in MoM. The upward price movement is primarily attributed to several factors influencing the market. Price increases are linked to supply challenges in the country, including a poor harvest in key coffee-growing areas like Đắk Lắk, where yields fell by 23,057 tons due to pest issues and adverse weather conditions such as drought and El Niño. The ongoing high global demand for Robusta coffee further contributed to higher prices. Looking ahead, coffee prices may decrease in the coming months. Vietnam's coffee production is set to increase in the 2024/25 season, with an estimated total of 30.1 million 60-kg bags, up from 27.5 million in the 2023/24 season.
Leveraging advanced irrigation technologies, such as drip irrigation, smart irrigation systems, and moisture-sensing technologies, can significantly improve coffee production by boosting yield and quality, especially in regions facing climate challenges like droughts and irregular rainfall. Smart irrigation systems, which use sensors and real-time data to optimize water usage, can help reduce waste and ensure crops receive the right amount of water at critical stages. Additionally, precision irrigation techniques, which combine satellite imagery and soil moisture sensors, can improve water efficiency and crop resilience. By incorporating these innovations, coffee-growing countries can enhance production resilience, ensuring a more consistent supply. This approach improves the overall quality of beans and aligns with the growing global demand for premium, sustainably produced coffee. Emphasizing such technologies can help these regions tap into high-value markets in Europe and North America, driving export growth and reinforcing their reputation for quality and sustainability in the coffee industry.
Asia's coffee market is experiencing growth, especially with increasing consumption in countries like China and India. Brazil and Vietnam, leading coffee exporters, should focus on growing their presence in these regions by emphasizing ready-to-drink coffee and introducing diverse coffee varieties. Peru's strong export performance suggests an emerging appetite for Peruvian coffee might exist in other parts of Asia. Coordinated marketing campaigns highlighting the uniqueness of these countries' coffee varieties could tap into the fast-growing coffee culture in Asia.
Sources: Tridge, Agraria PE, Agro News GR, Club of Mozambique, G1, Industri Kontan, ISNA, Kvedomosti, Noticias Agricolas, Portal do Agronegocio, VOH Online
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