In Short:
Robusta coffee prices hit a record high due to a supply shortage from Vietnam, the top producer. Prices have increased by 63% this year, driven by rising global demand. Vietnam’s lower coffee exports reflect tight market conditions caused by drought. Growing demand for coffee globally is expected to continue, with Brazil increasing robusta production to potentially become a leading producer.
Robusta Coffee Prices Hit Record High
Hey there! So, you won’t believe this – Robusta coffee prices skyrocketed to an all-time high on Tuesday! The global market is going bananas due to a slowdown in shipments from the top producer, **Vietnam**.
The price of robusta beans has shot up by a whopping 63% this year! Can you imagine that? It reached a peak on Tuesday at $4,667 a metric ton on the London-based ICE Futures Europe market.
For the past 18 months, prices have been climbing steadily as global producers, like Vietnam, struggle to keep up with the growing demand. This year alone, prices have soared by 58%!
The Rising Demand
Now, get this – the demand for robusta coffee has been on the rise. Why, you ask? Well, as roasters switch from arabica to the cheaper robusta beans, the demand has been booming. While robusta is often used for making instant coffee, it’s also being added to coffee blends dominated by arabica. Fancy, right?
Recent data shows that Vietnam’s coffee exports in June were down to just 70,202 tons. This brings the total for the first half of the year to 893,820 tons, a decline of 11.4% from the previous year. Ouch!
It seems that the lower export numbers for Vietnam are due to the tight market conditions within the country. It’s a tough situation for the largest robusta-producing nation out there. Hang in there, Vietnam!
The Challenges Faced
Coffee production in Vietnam has had its ups and downs. Nearly tripling during the first two decades of the century, it peaked in the 2021/22 season at 31.58 million 60-kg bags. Unfortunately, recent seasons have seen smaller crops, with expectations of a further decline in the upcoming season.
This year, Vietnamese coffee growers have been struggling with the worst drought in almost a decade, putting a dent in the outlook for the next harvest. Not an easy time for our coffee friends in Vietnam.
Global Coffee Demand
Despite the rising prices, the demand for coffee continues to grow worldwide. The International Coffee Organization predicts a 2.2% increase in global coffee consumption for the 2023/24 season. That’s a lot of coffee!
With challenges faced by Vietnamese producers, Brazil is stepping in. With a shift towards growing more robusta beans, Brazil is expected to become a key player in the robusta market. Looks like exciting times ahead for Brazilian coffee!
Last year, Brazil produced about 21.5 million bags of robusta coffee, close to a record. This year, analysts are expecting an even larger crop, despite some initial concerns from farmers about yields. Go Brazil!
