Indonesia's production and exports fell short of expectations!

Earlier, the U.S. Department of Agriculture released the status of Indonesia's coffee industry. In this report, it pointed out that the weather conditions in Indonesia have improved, so Indonesia's coffee production in 2024/25 is expected to return to 10.9 million bags (69 kilograms per bag). Among them, Arabica coffee production is expected to be 1.4 million bags, consistent with previous years, while Robusta coffee production is expected to be 9.5 million bags, up from 6.3 million bags in 2023/24.

However, the market is not optimistic, because Indonesia has been suffering from a series of natural disasters such as floods, landslides, and volcanic eruptions since the beginning of this year. The industry is not optimistic about this year's coffee production.

Just yesterday, Mount Mobira erupted at dawn in central Java Island in Indonesia, sending lava gushing onto the slopes. Therefore, many coffee farms nearby may have an impact, resulting in reduced production. However, most of the coffee is grown in the eastern region of the island, and the production in the central region is low, which has less impact on overall production.

Recently, according to the commodity export report released by the Indonesian government, Arabica's export volume has been relatively stable. However, in May, the country's Sumatra Island exported a total of 122544 bags of Robusta coffee (60 kilograms per bag), a decrease of 54% compared with the same period last year. In addition, the cumulative export of Robusta coffee in the first two months (April and May) of 2024/25 was 179599 bags, a decrease of 51.34% compared with the same period last year.

However, although the weather is reported to have improved, Indonesia has been affected by El Niño since 2023. Even if the report states that El Niño ends around April, the subsequent neutral phase will still affect Indonesia. Farmers are also selected to worry about the impact of the subsequent La Niña phenomenon.

According to reports, due to the impact of El Niño, coffee trees will be affected by drought in 2023 and the yield will decrease. In addition, the rainy season on Sumatra Island, Indonesia was delayed by nearly January. Large-scale harvesting, which originally started in April, was hindered by heavy rain and was delayed until May, resulting in a decrease in exports in the previous months.

In addition, in recent times, Indonesia's national economic growth has been stable and its performance in the food, beverage, tourism and other industries has improved. However, this has increased Indonesia's domestic coffee consumption by 10,000 bags. In 2024/25, Indonesia's coffee consumption will reach 4.8 million bags, resulting in a reduction in the amount of coffee available for export.

In addition, the current high price of Robusta is mainly due to severe drought in Vietnam, which has led to reduced coffee production. In addition, Brazil recently reported that coffee production fell short of expectations, and total production may decrease by 8%-14%. This has also led buyers to choose to purchase Robusta, Indonesia, but sources pointed out that Indonesian coffee exporters are postponing coffee sales and exports because exporters believe that coffee prices can rise further due to tight global supply and want to wait until the price is higher. Sell coffee beans when the price is higher.