How Are Robusta Coffee Beans and Arabica Prices Shifting?

Vietnam's January coffee exports reached 238,266 metric tons, a single-month record up 14.8% from December, even as drought pushed 2023/24 production forecasts down 10% to 1.656 million tons. Brazil's main growing regions received rain that should lift new-crop output. Robusta prices fell while arabica held steady on steady Central American exports, and Colombia's production rose sharply.

The Red Sea crisis has disrupted trade routes, leading some traders to buy robusta coffee beans from Brazil instead. Vietnamese farmers held back beans hoping for higher prices before the Lunar New Year, and some traders struggled to fill forward contracts. The market now expects Vietnam's 2023/24 production to rise to 28 million bags, still below average.

Recent coffee industry reports from multiple countries show that the global coffee market is undergoing a series of significant changes. Vietnam's coffee export volume in January hit a historic single-month high, and despite drought leading to lower production expectations, export performance remained strong. Rainfall in Brazil's main producing regions has benefited crop growth, and new-crop production is expected to increase year-on-year. At the same time, the Red Sea crisis continues to affect trade routes, prompting some traders to turn to Brazil to purchase robusta coffee beans. Arabica prices have remained stable because exports from several Central American countries have been steady. Colombia's coffee production has risen sharply, becoming a bright spot in the Americas market. This article will review production and export data from major producing regions and analyze the current supply-demand pattern and future direction of the coffee market.

Recently, according to Nasdaq.com, coffee prices have recently begun to show a downward trend, with robusta coffee prices leading the decline, while arabica prices have remained relatively stable.

The decline in robusta coffee prices has mainly been influenced by factors in Vietnam and Brazil. Although Vietnam has suffered drought and Vietnam's Ministry of Agriculture has forecast that the country's coffee production in 2023/24 will decrease by 10% to 1.656 million tons, Vietnam's General Statistics Office reported that January coffee exports reached 238,266 metric tons, up 14.8% from last December and up 6% from last January. This export volume was not only higher than the previous market forecast of 3.25 million bags, but also set a record for single-month exports in history.

In addition, Vietnam, like China, celebrates the Lunar New Year. Previously, Vietnamese coffee farmers were unwilling to sell the coffee beans they held, taking a wait-and-see approach and hoping to sell after prices rose further so they would have enough money for the holiday. At the same time, many traders found it difficult to obtain enough volume to fulfill previously signed forward contracts and had to renegotiate purchase prices with farmers. Due to the increase in coffee exports in January, the market predicts that Vietnam's coffee production in 2023/24 will increase to 28 million bags, and although this is below average production, export volume will further increase to 25.5 million bags.

In Brazil, data from local meteorological authorities show that continuous rainfall in the main coffee-producing regions in February was beneficial to crop growth. Researcher StoneX previously forecast that Brazil's coffee production in 2024/25 will increase by 4.2% year-on-year to 67 million bags. In addition, due to the ongoing Red Sea crisis, traders have reduced purchases of coffee beans in Vietnam because routes must be diverted around the Cape of Good Hope in Africa, increasing shipping costs and transport time, so traders have turned to Brazil to buy robusta coffee beans.

The stability of arabica prices is because, in the Americas, coffee exports from Guatemala, Costa Rica, Nicaragua, and El Salvador have remained stable, with export volumes basically in line with the same period last year. In Honduras, however, coffee production in 2023/24 is expected to be 5.35 million 60-kg bags, down about 6% from the previous year. Nevertheless, due to stable logistics, export volume could reach 4.95 million bags, unchanged from last year.

In the Americas, Colombia's coffee production has increased considerably. Colombia's coffee production in 2023/24 is expected to reach 12.6 million bags, up 15.5% from the previous year, and coffee export volume is also expected to increase by about 10.8 million bags, up 12.5% from the previous year.

The above content is compiled by CoffeeHunters, a coffee news website.