Global Coffee Prices Soar in September 2024 Amid Severe Supply Shortages from Brazil and Vietnam

Coffee prices have surged significantly on a global scale throughout September 2024, primarily driven by material shortages resulting from poor yields in major Coffee-exporting countries, specifically Brazil and Vietnam. Adverse weather conditions, including severe drought in Brazil and destructive typhoons in Vietnam, have severely impacted Coffee production in these regions. Brazil, being the world's largest Coffee producer, has faced substantial challenges due to prolonged dry spells, which have hindered crop development and reduced harvest volumes. Simultaneously, Vietnam, a leading exporter of Robusta Coffee, has experienced significant disruptions caused by typhoons, which have further exacerbated supply chain issues and led to lower-than-expected yields.

In Brazil, Coffee prices surged significantly by up to 6.9% in September 2024, primarily due to a supply shortage. Insights from various market participants reveal that growers in the key Coffee-producing region of São Paulo are currently evaluating the extensive damage inflicted by recent wildfires. These fires have devastated crops and compounded the challenges posed by the worst drought Brazil has experienced in over seventy years. The severe weather conditions have severely disrupted Coffee production, leading to significant supply constraints and upward pressure on prices. The prolonged dry conditions have particularly impacted key arabica Coffee-growing regions, resulting in substantially lower yields. This combination of factors has created a challenging environment for Coffee producers, further exacerbating the supply issues.

On the demand side, despite some fluctuations, overall demand for Brazilian Coffee has remained robust, particularly from major importing countries such as Germany and the United States. This steady demand, coupled with supply constraints, is likely to sustain the upward trend in Coffee prices as the market adjusts to the ongoing challenges faced by producers.

Similarly, prices in Vietnam surged in September 2024 due to a significant supply shortage. The Central Highlands, the country's main Coffee-growing region, suffered extensive damage from Typhoon Yagi, impacting thousands of hectares of Coffee plantations. This destruction has resulted in substantial losses for both the current harvest and future production, as the affected trees will require several years to recover fully.

On the demand side, overall interest in Vietnamese Coffee remains subdued, despite some fluctuations. The Export-Import Department reports significant volatility in the Coffee industry throughout 2024. While export volumes declined by 14.7% in September, totaling 65,000 tons, the export value soared, reflecting a 65.2% increase compared to the same period last year. This sharp rise in export prices presents substantial opportunities for transportation and logistics companies, particularly those focused on premium Coffee shipments, to provide value-added services amidst the challenges facing the market.

According to ChemAnalyst, this shortage is expected to persist in the near future, potentially driving Coffee prices even higher.