The latest USDA report on Coffee: World Markets and Trade provides a comprehensive overview of the global coffee market, highlighting significant trends and challenges faced by major coffee-producing countries. The 2024/25 marketing year shows signs of recovery, but several persistent issues continue to shape the landscape.
Brazil Leads the Recovery
Brazil, the largest coffee producer globally, is expected to see a substantial rebound in coffee production. The combined Arabica and Robusta output is forecasted to rise by 3.6 million bags, reaching 69.9 million bags. This increase is driven primarily by favorable weather conditions that boosted yields despite earlier high temperatures that caused some cherries to drop prematurely. Arabica production is expected to improve by 3.3 million bags to 48.2 million, while Robusta is set to rebound by 300,000 bags to 21.7 million. Consequently, Brazil’s coffee bean exports are forecasted to increase by 1.0 million bags to 42.5 million, with ending stocks rising nearly 700,000 bags to 3.5 million.
Colombia’s Steady Growth Amidst Pest Infestations
Colombia, the third-largest coffee producer globally and the second-largest Arabica producer after Brazil, is forecasted to see a modest increase in production, rising by 200,000 bags to 12.4 million. However, the country faces significant challenges from increased rates of coffee cherry borer infestations, which are expected to keep yields below recent highs. Despite these challenges, Colombia’s exports, mainly to the United States and European Union, are projected to rise by 200,000 bags to 10.8 million.
Vietnam Struggles with Environmental Challenges
Vietnam, the leading Robusta producer, is forecasted to maintain its production at nearly 29.0 million bags, with over 95% being Robusta. However, the delayed rainy season and above-average temperatures have adversely affected yields. Additionally, reduced groundwater and forest cover pose long-term challenges, as many coffee growers rely on wells for irrigation. The country has implemented several sustainability initiatives, including replacing old coffee trees, intercropping to increase shade and water retention, and adopting water-saving irrigation systems. Despite these efforts, bean exports are forecasted to drop by nearly 500,000 bags to 24.4 million due to reduced total supply and rising domestic consumption.
Indonesia’s Significant Rebound
Indonesia is expected to see a significant rebound in coffee production, with combined Arabica and Robusta output forecasted to increase by nearly 2.8 million bags to 10.9 million. Favorable growing conditions in the lowland areas of Southern Sumatra and Java, where approximately 75% of Robusta is grown, have contributed to this recovery. Consequently, Indonesia’s exports are expected to rise by 2.2 million bags to 6.5 million.
Global Market Dynamics
World coffee production for the 2024/25 marketing year is forecasted to rebound by 7.1 million bags to 176.2 million, driven primarily by recoveries in Brazil and Indonesia. Global exports are expected to rise by 3.6 million bags to 123.1 million, with strong shipments from Indonesia and Brazil. Global consumption is projected to increase by 3.1 million bags to 170.6 million, and ending stocks are expected to rise by 1.9 million bags to 25.8 million, following three years of decline.
Regional Insights
- Central America and Mexico: Production is forecasted to rise by 300,000 bags to 16.6 million, with Arabica accounting for 95% of the output. Exports are expected to increase by 500,000 bags to 13.4 million.
- India: Combined Arabica and Robusta harvest is forecasted to decrease by 100,000 bags to 6.0 million due to poor pre-monsoon rains. Exports are forecasted to decrease slightly to 4.2 million bags.
- European Union: Imports are forecasted to increase by 2.0 million bags to 47.5 million, with ending stocks expected to rise by 2.1 million bags to 11.6 million.
- United States: Imports are forecasted to increase by 900,000 bags to 24.5 million, driven by rising consumption. Ending stocks are expected to remain unchanged at 5.7 million bags.
Challenges and Sustainability Efforts
The global coffee market continues to face significant challenges, including extreme weather events, pest infestations, and high fertilizer prices. In Colombia, for instance, elevated fertilizer prices have limited utilization, affecting yields. Sustainability efforts are crucial to addressing these challenges. In Vietnam, strategies include replacing old coffee trees, intercropping, adopting water-saving irrigation systems, and certifying farms for sustainable practices. Approximately 30% of Vietnam’s coffee area has been certified to meet sustainability standards.
Revisions to 2023/24 Forecasts
- World Production: Lowered by 2.2 million bags to 169.2 million due to reductions in Central America, Mexico, and Indonesia. However, Vietnam’s production was revised up by 1.6 million bags due to improved yields.
- World Exports: Lowered by 400,000 bags to 119.5 million, with reductions in Central America, Mexico, and Indonesia. Brazil’s exports were revised up by 2.0 million bags due to higher-than-anticipated stock drawdown.
- World Ending Stocks: Reduced by 2.6 million bags to 23.9 million, with significant reductions in Brazil and Indonesia.
Conclusion
The global coffee market shows signs of recovery for the 2024/25 marketing year, driven by increased production in key countries like Brazil and Indonesia. However, challenges such as pest infestations, extreme weather events, and high fertilizer prices persist. Sustainability efforts are crucial to ensuring long-term stability in the coffee market. With rising global consumption and increased exports, the coffee industry remains dynamic and resilient, adapting to changing conditions and challenges.