MILAN – Estimates and statistics continue to move the coffee futures markets, this time to the downside. Yesterday, Wednesday 11th December, both exchanges went down, more so for the ICE Arabica. In New York, the main contract lost almost 14 cents (-4.2%) to close at 320.20 cents, more than 28 cents below yesterday’s all-time high.
London coffee futures also suffered a setback: the contract for March delivery lost $131, ending at $5.101, after hitting an intraday low of $5.020.
The news of the day was the publication of a report by the Neumann Kaffee Gruppe, which partially contradicted yesterday’s pessimistic forecasts by Volcafe for Brazil’s next Arabica crop (2025/26), which the Swiss trader estimated at 34.4 million bags.
According to the Neumann, the crop is more likely to be in the region of 40 million bags, although it is still too early to make an accurate estimate for the next harvest season.
Also contributing to the fall in coffee futures prices were Ice’s certified Arabica stocks, which were at their highest level in two and a half years, although still at historically low levels (919,388 bags, of which 872,143 in Antwerp warehouses and 547,287 from Brazil).
On the other hand, the Robusta prices came under pressure from the USDA’s Gain Report on Vietnam, which predicted a slightly brighter future for the 2024/25 season.
According to US experts, Vietnamese production will rise from 27.5 million bags last year to 30.1 million bags this year (of which 29 million bags of Robusta).
While acknowledging the impact of this year’s drought and pest outbreaks, the report argues that producers – encouraged by very high price levels – have invested in farm care and inputs, limiting losses. Farmers with access to irrigation were also able to offset most of the impact of the drought, says the report.
“This year farmers carefully pick all available coffee fruit, minimizing loss during collection, drying, and packaging. In the past, many farmers would only select large coffee fruits and harvest quickly to limit labour costs” the report also says.
It is important to note that this forecast runs counter most reports from the market, which are predicting a further decline in Vietnam’s production.
Total coffee area was 720,000 hectares in 2023 according to Vietnam’s General Statistics Office (GSO), with total harvested area at 677,000 hectares. According to GSO, coffee area and harvested area have increased 13% and 15% respectively since 2013.
The Ministry of Agriculture and Rural Development (MARD) forecasts that total coffee area will drop 10% to 650,000 hectares by 2030, with Robusta accounting for approximately 90 percent of total coffee area. This plan sets a goal that 80-90% of newly planted coffee areas will use varieties meeting required standards, and that 35-40% of coffee will meet relevant production standards (e.g., RA, 4C, Flo, C.A.F.E. Practices.) MARD anticipates that 70% of coffee area will have implemented traceability codes for product origin by that time. This decision reflects the government’s goal of upgrading coffee quality through new varieties and certification programs.
A growing number of coffee farmers are intercropping with other crops such as pepper, avocado, durian, and peaches. This helps farmers become more resilient to climate change and market fluctuations. MARD has provided technical instructions for intercropping coffee with pepper, avocado, and durian trees in a way to maintain coffee yields and farmers have tended to follow this guidance.
The report cut the 2023/24 export figure by almost 2.5 million bags to 24.4 million, of which 22 million were green coffee.
For this year, it forecasts an increase to 26.92 million, including 24 million bags of green coffee, 2.5 million bags of soluble coffee and 420,000 bags of roasted coffee.
To meet market and industry needs, Vietnam is importing increasing volumes of green and processed coffee.
In 2023/24, coffee imports reached 800 thousand bags, of which 400 thousand were green coffee and the remaining 400,000 divided equally between roasted and soluble.
For the current coffee year, the report predicts a further increase to 900 thousand bags (500 thousand green, 200 thousand roasted and 200 thousand soluble coffee).
Domestic consumption is also on the rise and is expected to reach 4 million bags in 2024/25.
