Brazil and Colombia have an outsized effect on the global coffee market. Daily Coffee News photo by Nick Brown.
The USDA Foreign Agriculture Service last week released semi-annual market reports on two of the world’s largest coffee-producing markets, Brazil and Colombia.
The reports come against the backdrop of a 27-year-high commodity price for arabica coffee, as reflected in the ICE arabica futures price, a.k.a. the “C price.” They also come as producers and traders throughout the world recalibrate given the European Commission’s decision to delay implementation of its landmark deforestation law, known as EUDR, by a year.
Taken together, the reports project further strains on the global green coffee market, as China exponentially increases its role as a consuming country, and as climate change and other factors threaten long-term production. The United States remains the leading export destination of coffees from Brazil and Colombia.
Here’s more from each report (with financial figures translated to USD on Nov. 26):
Brazil Coffee Semi-Annual Market Report
Find the complete report here. Here are some key takeaways:
Brazil remains the global leader in coffee production, with a forecast of 66.4 million bags for the 2024/25 market year. Despite weather-related setbacks, the country is expected to maintain a strong export performance, filling gaps in global supply caused by disruptions in other coffee-producing nations such as Vietnam, according to the report.
Production Insights
- Arabica output is projected at 45.4 million bags, a 1.1% increase over the previous year, benefiting from Brazil’s positive biennial cycle despite periods of drought and high temperatures.
- Robusta production is expected to decline slightly to 21 million bags, affected by irregular rainfall during critical growth stages.
- Adverse weather, including prolonged droughts and record-high temperatures, accelerated crop maturation, leading to smaller beans and lower yields in several regions.
Trade Highlights
- Brazil exported a record 47.3 million bags of coffee in the 2023/24 season, a 32.7% increase from the prior year, with arabica accounting for 72.5% of shipments.
- Exports to China grew by 65%, supported by rising coffee consumption and a $500 million agreement with China’s largest coffee chain, Luckin Coffee.
- In September 2024 alone, Brazil exported 4.5 million bags, generating US$1.19 billion in revenue, an 84.5% increase compared to the same period in 2023.
Economic Factors
- Arabica coffee prices rose by 80% year-over-year to an average of $264.88 per 60-kilo bag in October 2024, while robusta prices surged 120% to $251.88 per 60-kilo bag during that same period.
- Domestic coffee consumption remains stable at 22.67 million bags, with rising retail prices impacting growth potential. Per capita consumption increased to 6.4 kg of green coffee annually.
Policy Support
- The Coffee Economy Defense Fund (FUNCAFE) allocated $1.18 billion for the 2024/25 harvest, supporting modernization, quality improvements, and storage to stabilize prices.
- Minimum prices for arabica were set at $109.83 per bag, reflecting reduced production costs, particularly for fertilizers.
Colombia Coffee Semi-Annual Market Report
Find the complete report here. Here are some key takeaways:
Production Trends
- Market year 2024/2025 coffee production is now projected to reach the equivalent of 12.9 million bags, up 1.1% from the previous year.
- Increased yields are attributed to improved agronomic practices, such as agroforestry and soil conservation, and favorable weather conditions following the El Niño phenomenon.
- Approximately 87% of Colombia’s coffee-growing areas now feature rust-resistant varieties.
Domestic and Global Consumption
- Domestic consumption is expected to reach 2.3 million bags, a 4% increase year-over-year, fueled by interest in specialty coffee among younger consumers.
- Per capita coffee consumption stands at 2.8 kilograms, significantly lower than other producing countries.
Trade Developments
- Exports are forecasted to maintain at 12 million bags for 2024/2025, with the U.S. as the top market (40% share) and China showing a 246% increase in imports year-over-year.
- A new logistics model by the Colombian Coffee Growers Federation (Fedecafe) now facilitates direct export of freshly roasted coffee to the U.S. within 72 hours. The organization plans to expand that program in 2025.
- Coffee imports, primarily from Brazil and Peru, are estimated at 1.4 million bags, reflecting stable domestic demand and recovering local production.
Policy and Support for Farmers
- The Coffee Income Compensation Mechanism was introduced in 2024 to safeguard growers from low prices but remained unused due to relatively high market prices.
- The Agricultural Inputs Access Fund provided $12 million in resources to help smallholders mitigate El Niño’s effects.
Comments? Questions? News to share? Contact DCN’s editors here.
Comment