Robusta Coffee Rebounds as Vietnam’s Coffee Exports Fall

Coffee prices on Monday were mixed, with arabica falling to a 2-1/2 week low and robusta coffee recovering from a 1-month low. The slumping Brazilian real (^USDBRL) undercuts coffee prices as the real posted a new 2-1/2 year low against the dollar, encouraging export sales from Brazil’s coffee producers. However, robusta coffee recovered from a 1-month low and moved higher after Vietnam’s General Statistics Office reported that Vietnam’s Jan-June coffee exports were down -10.6% y/y at 902 MT.

Coffee prices have some support from concerns that drier-than-normal conditions could adversely affect Brazil’s coffee crops. Somar Meteorologia reported that Brazil’s Minas Gerais region received no rain last week for the fourth consecutive week, accounting for about 30% of Brazil’s arabica crop. A rebound in ICE coffee inventories from historically low levels is negative for prices. ICE-monitored robusta coffee inventories fell to a record low of 1,958 lots, although they recovered to an 11-3/4 month high on June 20 of 5,995 lots. ICE-monitored arabica coffee inventories fell to a 24-year low of 224,066 bags on November 30, but they recovered to a 16-month high last Tuesday of 842,434 bags.

A faster pace of Brazil’s coffee harvest is boosting coffee supplies and is bearish for prices. Robusta coffee prices are underpinned by fears that excessive dryness in Vietnam will damage coffee crops and curb global production. Coffee trader Volcafe said that Vietnam’s 2024/25 robusta coffee crop may only be 24 million bags, the lowest in 13 years, as poor rainfall in Vietnam has caused “irreversible damage” to coffee blossoms.

Vietnam’s agriculture department announced that Vietnam’s coffee production in the 2023/24 crop year would drop by -20% to 1.472 MMT, the smallest crop in four years, due to drought. The Vietnam Coffee Association also projected that Vietnam’s robusta coffee production in the new marketing year of 2024/25 will dip slightly to 27.9 million bags from 28 million bags in the 2023/24 season.

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