Global robusta coffee prices hit record highs last month as Viet Nam, the largest producer of this coffee, faced challenges from drought and farmers switching to durian. Despite the fact that robusta coffee is typically more affordable, the price situation was on the rise.
According to a report by the International Coffee Organization (ICO), robusta coffee prices reached their highest level in 45 years, with a 17% wholesale increase in April alone.
Robusta coffee futures contracts in London even surpassed US$4,500 per ton at the end of April, setting a new record.
Many coffee farmers have switched to durian, which is popular in China. Viet Nam's durian exports to China skyrocketed to US$2.3 billion last year, a fivefold increase from the previous year, and are expected to reach US$3.5 billion this year.
This has led to a decline in the area under coffee cultivation, which ultimately disrupted the coffee supply due to difficulties in finding suitable land for coffee cultivation.
Viet Nam also faced supply shortages due to unfavorable weather conditions caused by the El Nino phenomenon. Hot weather and water shortages slowed the growth of coffee plants, affecting overall production.
According to the ICO, Viet Nam's coffee production is expected to reach 29.2 million bags (60 kilograms per bag) from October 2022 to September 2023, an annual decline of 9.8%.
In addition to weather and production factors, rising transportation and fuel costs have also affected coffee prices. According to VnExpress, large companies in Europe and the Americas are beginning to shift their purchases from expensive Arabica beans to more affordable Robusta beans.
Increased demand in Southeast Asia and China is also contributing to the rise in Robusta coffee prices. From October 2022 to September 2023, Asia Pacific will consume more than 44.5 million bags of coffee, accounting for more than a quarter of total global consumption.
During this period, coffee sales in Asia Pacific increased by 12% compared to four years ago, while global sales increased by only 1%.
The price increase is driven by a forecast of a reduction in export volumes in the coming months as a result of supply constraints and limited stock levels in Viet Nam.
