For the Quarter Ending September 2024
North America
The North American coffee market experienced a significant surge throughout the third quarter of 2024, primarily driven by a shortage of imported coffee from major suppliers, particularly Brazil and Colombia. Adverse weather conditions in these regions severely impacted coffee plantations, restricting global supplies and creating upward pressure on prices. Brazil, which accounts for approximately 40% of the world's coffee production, faced one of the most severe droughts in decades, disrupting its coffee-growing regions and drastically reducing crop yields.
The prolonged dry conditions in Brazil, especially in key arabica coffee-growing areas, have led to a substantial decline in output, further exacerbating supply constraints on the global market. Similarly, Colombia, another significant coffee exporter, experienced unfavorable weather patterns, including excessive rainfall and landslides, that hampered coffee harvests and exports, further tightening supply availability.
Despite these supply-side challenges, demand in the North American coffee market remained relatively modest during the quarter. Consumers maintained steady purchasing patterns, with no significant surge in consumption, as overall demand for coffee in North America remained stable.
Asia
Throughout the third quarter of 2024, coffee prices in Asia experienced a significant surge, with India and Vietnam emerging as the most affected regions. The Vietnamese coffee market, in particular, faced acute shortages that contributed to a pronounced increase in prices. This situation was exacerbated by the impact of Typhoon Yagi, which struck the country earlier this month and severely affected the Central Highlands, the principal coffee-growing area. Initial assessments indicate that thousands of hectares of coffee plantations sustained considerable damage, resulting in substantial losses for both the current harvest and future production prospects. The affected coffee trees, which will require several years to recover fully, have raised concerns about the sustainability of coffee supply from Vietnam in the coming years. The dual challenges of droughts in Brazil and severe typhoons in Vietnam have significantly curtailed coffee production across the region. Brazil, being one of the largest coffee producers globally, has faced persistent drought conditions that have adversely affected crop yields, further tightening the global supply chain. The combined impact of these weather-related disruptions has compelled many major coffee importers to seek alternative sourcing options to meet their demand. In this context, India has emerged as a key supplier, benefiting from the supply shortages in both Brazil and Vietnam. The shift in sourcing dynamics has led to a surge in Indian coffee exports during this period, as importers increasingly turned to Indian coffee as a viable alternative. Indian coffee, particularly robusta varieties, has gained traction in markets that typically relied on Vietnamese arabica, highlighting the adaptability of the global coffee supply chain in response to unforeseen challenges. As per ChemAnalyst, the latest quarter ending price Coffee Robusta FOB Hai Phong (Vietnam) was evaluated at USD 4910/MT.
Europe
The European coffee market witnessed a significant surge throughout the third quarter of 2024, primarily driven by a shortage of imported coffee from major suppliers, notably Brazil and Vietnam. Adverse weather conditions in these regions severely impacted coffee plantations, restricting global supplies and exerting upward pressure on prices. Brazil, which accounts for approximately 40% of the world's coffee production, faced one of the most severe droughts in decades, disrupting its coffee-growing regions and drastically reducing crop yields. The prolonged dry conditions in Brazil, particularly in key arabica coffee-growing areas, resulted in a substantial decline in output, further exacerbating supply constraints in the global market. Similarly, Vietnam, another major coffee exporter, experienced unfavorable weather patterns, including excessive rainfall and landslides, which hampered coffee harvests and exports. The situation was further aggravated by the impact of Typhoon Yagi, which struck the country earlier this month, severely affecting the Central Highlands, the principal coffee-growing region. Initial assessments indicate that thousands of hectares of coffee plantations sustained considerable damage, leading to significant losses for both the current harvest and future production prospects, thereby tightening supply availability even further. Despite these supply-side challenges, demand in the European coffee market remained relatively modest during the quarter. Consumers exhibited steady purchasing patterns, with no significant surge in consumption, as overall demand for coffee in Europe remained stable. This stability in demand, coupled with supply constraints from major exporting countries, has contributed to the dynamic pricing environment in the European coffee market.
South America
Coffee prices surged in the South American market, with Brazil and Colombia emerging as the most affected regions. This price increase was primarily attributed to the widening disparity between demand and supply. Brazil, which accounts for approximately 40% of the world's coffee production, faced one of the most severe droughts in decades, disrupting its coffee-growing regions and drastically reducing crop yields. As the quarter progressed, reports from various market participants indicated that coffee growers in Brazil's key coffee-producing region, São Paulo, are currently assessing the extensive damage caused by recent wildfires, further exacerbating the supply constraints. Similarly, coffee prices in Colombia also experienced a significant surge. Although the country is grappling with adverse weather conditions, the National Federation of Coffee Growers remains optimistic about meeting its production target of 13 million bags for 2024. This optimism reflects a robust commitment to maintaining and enhancing the quality and availability of Colombian coffee in the international market, particularly in light of the firm demand observed from global consumers. The combined effects of these weather-related challenges in Brazil and Colombia have intensified the pressures on supply chains, driving prices higher as producers and exporters strive to balance the ongoing demand in the international market.
