Coffee Market Analysis Report – November 25, 2024
Uganda’s October 2024 coffee exports revealed a significant improvement:
– Exported 496,820 bags, a 5.78% year-on-year (YoY) increase compared to October 2023. Robusta coffee led the surge with 457,853 bags, marking an 11.66% YoY growth. Arabica coffee, however, declined sharply by 34.67%, reflecting challenges in this segment.
– Export earnings soared to USD 139.05 million, a 76.27% YoY increase, driven by higher average coffee prices.
This performance underscores Uganda’s pivotal role as a global Robusta supplier, with its annual output estimated at 6.5 million bags. Despite ongoing issues in Arabica production, the country has capitalized on strong Robusta demand to drive revenue growth.
Strategic Coffee Trade: Brazil-China Partnership
China, one of the fastest-growing coffee markets globally, secured a major supply agreement with Brazil. Luckin Coffee, a leading Chinese coffee chain, committed to purchasing 240,000 tons (approximately 4 million bags) of Brazilian coffee over five years (2025–2029).
Key insights:
– China’s 16.5% YoY increase in coffee consumption is expected to reach 6.2 million bags in 2024/25.
– Less than 40% of China’s coffee consumption relies on imported green coffee, presenting an opportunity for trade expansion.
This agreement strengthens Brazil’s position in the Asian market and highlights China’s growing influence in global coffee dynamics.
Brazil: Revised Production and Export Forecasts
The USDA adjusted Brazil’s 2024/25 coffee crop estimate downward by 5.01%, now projected at 66.40 million bags. Despite this reduction, production represents a modest 0.15% increase from the previous biennial crop.
– Arabica production: 45.40 million bags, a 1.13% YoY increase.
– Robusta production: 21 million bags, a 1.87% YoY decrease.
– Export outlook: Anticipated at 40.5 million bags, down 6.03% YoY.
Weather conditions have remained favorable for the upcoming 2025/26 crop, though market participants remain cautious about potential disruptions in Arabica-producing regions.
Colombia: A Recovery in Washed Arabica Production
Colombia’s revised production forecast for the 2024/25 coffee year reflects a positive trajectory:
– Total production: 12.90 million bags, a 4.03% increase from earlier estimates.
– Favorable weather and enhanced agronomic practices contributed to this recovery.
– Exports: Expected at 10.90 million bags, a 1.87% YoY increase.
Colombia’s consistent production highlights its role as a reliable supplier of washed Arabica coffee, despite broader market fluctuations.
Certified Coffee Stocks and Supply Trends
Certified coffee stocks held against the New York exchange showed the following movements:
– Total stocks increased to 893,325 bags, with 98.09% stored in Europe.
– Pending grading stocks fell to 78,935 bags, suggesting a slower pace of certification.
The 2024/25 global coffee balance highlights a looming deficit:
– Global production: Estimated at 169.5 million bags.
– Global demand: Forecasted at 171 million bags, resulting in a 1.5 million bag shortfall.
Market Performance and Price Trends
Arbitrage movements:
– November 20: 68.56 Usc/Lb, with London Robusta trading at a 24.37% discount.
– November 21: 78.57 Usc/Lb, widening to a 26.57% discount.
Market trading dynamics:
– November 20: Both New York and London markets opened firm but faced selling pressure, closing on a softer note.
– November 21: A stronger start led to mid-session highs, with New York rebounding to close firmer, while London closed near unchanged.
Commodities Context: Broader commodity markets reflected macroeconomic uncertainty, with bullish trends in Gold, Platinum, and Palladium, while agricultural commodities like Robusta coffee, Corn, and Soybeans experienced softness.
Conclusion and Market Implications
The coffee market dynamics during this period reveal critical trends:
1. Uganda’s strength in Robusta exports highlights its potential for sustained revenue growth, even amid challenges in Arabica production.
2. Brazil’s revised crop estimates signal tighter global supplies, which could support prices into 2025, particularly for Arabica coffee.
3. Colombia’s recovery reinforces its role as a key supplier of washed Arabica, meeting steady global demand.
4. Global deficit outlook suggests upward pressure on prices, particularly as demand continues to outpace production.
Looking ahead, the interplay of weather conditions in Brazil, Colombia, and other major producers, coupled with geopolitical and macroeconomic factors, will shape the market trajectory. Stakeholders should closely monitor certified stock levels, export flows, and emerging trade agreements to navigate potential price volatility effectively.
This analysis provides a comprehensive overview of the coffee market, offering insights to inform strategic decisions for producers, traders, and investors.
