Robusta Coffee Production Forecast to Reach 27.85 Million Bags

Jul 9, 2024
HOME Analysis Robusta Coffee Production Forecast to Reach 27.85 Million Bags

The 2024-2025 crop year is projected to see Robusta coffee production at approximately 27.85 million bags, a slight decrease from the 28 million bags produced the previous year. Conversely, Arabica coffee output is expected to rise to 1.15 million bags.


Domestic Coffee Price Surge and Farmer Investment


Recently, domestic coffee prices have surged, prompting many farmers to invest in new coffee plantations or replace other crops with coffee. In Gia Lai province, for instance, around 100,600 hectares are devoted to coffee, with 90,000 hectares actively producing. The average yield is over 3.1 tonnes of beans per hectare, resulting in an annual output exceeding 281,000 tonnes. This trend has driven up seedling prices and created supply shortages.


Market Dynamics and Investor Activity


Experts attribute recent price trends to investor actions, including speculative activities. Currently, stored coffee beans are depleted due to past production activities, where farmers sold off their stocks when prices rose. The agricultural market lacks tight regulation, with farmers independently deciding on their output. Consequently, before the Tet holiday, most stored coffee had been sold.


Impact on Export Contracts and Market Manipulation


Over the past three months, coffee prices have continued to rise, but farmers no longer have coffee stocks. This shortage has caused confusion among businesses, risking fulfillment of export contracts. Companies are now compelled to buy lower-quality coffee or source from traders, complicating export activities. Increased market prices indicate trader manipulation of market share.


Production Boost Amid Market Fluctuations


Farmers are hopeful for increased production before market downturns. The current coffee crop is nearing harvest, and farmers are investing more despite rising agricultural material costs, encouraged by potential profits.


Export Data and Market Outlook


According to the General Department of Customs, May 2024 saw 95,000 tonnes of coffee exported, valued at $400 million, reflecting a 44% drop in volume and a 38% decrease in value. This indicates a declining supply, likely supporting high coffee prices. In the first five months of 2024, Vietnam exported 833,000 tonnes of coffee, worth $2.9 billion—a 3.9% drop in volume but a 43.9% increase in value, with Robusta coffee comprising about 82% of total exports.


Global Consumption and Production Trends


Global coffee consumption is forecast to grow by 2% to 3% in the 2024-2025 harvest, with an overall growth rate of about 0.95% year-on-year, reaching 171.50 million bags. This growth is fueled by new coffee markets and increased domestic consumption in countries like China, India, Indonesia, the Middle East, and Vietnam.


Shift in Coffee Commodity Roles


The coffee market has seen a shift in the roles of Robusta and Arabica. Two years ago, Robusta exports were half of Arabica, but the trend has reversed. Vietnam primarily produces Robusta (over 94% of area and output) with Arabica making up a smaller portion. This shift has benefited Vietnam’s coffee industry amid changing global prices.


Supply Concerns and Price Projections


Vietnam’s coffee supply is dwindling, with future prospects uncertain. The Import-Export Department (Ministry of Industry and Trade) predicts rising coffee prices due to investor concerns about Vietnam’s supply outlook. Hedge funds have increased net buying positions, anticipating continued Robusta scarcity. Trader Volcafe estimates Vietnam’s 2024-2025 Robusta output at 24 million bags, the lowest in 13 years due to unfavorable weather.


USDA Projections


The USDA’s Foreign Affairs Office forecasts Vietnam’s 2024-2025 coffee output at around 29 million bags, slightly down from 29.1 million bags the previous year. Robusta production is expected at 27.85 million bags, with Arabica rising to 1.15 million bags. The total coffee area in Vietnam is predicted to remain stable at 600,000 hectares, despite more profitable alternatives like durian. Rising coffee prices have stabilized coffee acreage, remaining crucial in provinces like Lam Dong and Dak Lak.


Export and Inventory Trends


Vietnam’s coffee exports for the 2023-2024 crop year are forecast at around 26.85 million bags, a 5% decrease from the previous year, with further declines expected next year. Coffee inventories have sharply decreased, from 3.6 million bags in the 2022-2023 crop year to 892,000 bags in 2023-2024, and only 492,000 bags projected for 2024-2025.


Global Production Outlook


USDA reports indicate mixed coffee production trends globally. Increases are expected in Brazil and recoveries in Indonesia, Colombia, Peru, Mexico, and Nicaragua. In contrast, the outlook is negative for Guatemala, Costa Rica, and notably Honduras.


Hoang Minh
KAIFarm Team®
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