Many producing countries report production cuts! International coffee prices remain high

Recently, the international investment bank Hedgepoint released the latest coffee futures price report, saying that due to the growing uncertainty of global supply, coffee futures prices are still on an upward trend and are unlikely to fall in the short term.

Brazil, as the world's largest and most important coffee producer, has experienced a decline in coffee production due to severe weather such as drought, high temperatures and unstable rainfall. At present, the international coffee market is generally not optimistic about the coffee supply of Brazil in 2024x25, and even affects the coffee production of 2025x26.

According to Hedgepoint, the market had been worried about the long-term damage to coffee crops caused by the drought in Brazil, and the weather is still unstable in Minas Gerais, Brazil's main Arabica coffee-producing region. According to the report, 6 millimeters of rainfall was recorded in the state's coffee-growing areas last week, only 10 percent of the historical average, but this week, heavy rains occurred in parts of the state and caused flooding, resulting in one death.

As a result, Arabica coffee production is expected to decrease by 1.4 per cent to 42.6 million bags (60 kg / bag). The climate in Espiritu Santo, the main producing area of Robusta, is relatively stable, and Robusta coffee production is expected to increase by 12.2% to 22.6 million bags. But this is only the initial production forecast, and the production will be further reduced in the future as the coffee is fruited. In addition, a number of agencies, including the United States Department of Agriculture, also continued to reduce Brazilian coffee production.

In addition to Brazil, a number of other countries also face challenges, particularly in Central America, where frequent hurricanes increase the risk of coffee supply in 2024 / 25. In mid-November, Costa Rica reported a state of emergency affected by hurricanes, with heavy rains in many parts of the country and disasters such as floods, landslides and landslides.

According to the report, there have been more than 180 floods in the country, at least two people have been killed, three are missing, many houses have been destroyed, more than 1300 people have been evacuated and a number of major roads have been closed. According to the Costa Rican coffee association ICAFE, about 15 per cent of the country's coffee crops are affected.

In addition, Honduras, the largest coffee producer in Central America, has also been severely affected. According to a report by the Honduran National Secretariat for risk and Emergency Management, the country was hit by Storm Sarah earlier, causing flooding in many parts of the country, killing at least one person, affecting about 56000 people to varying degrees, and a state of emergency throughout the country.

Storm Sarah caused significant economic losses, serious damage to local infrastructure and damage to many agricultural equipment, which adversely affected the production of crops such as coffee.

According to statistics, in Lempira province, 400000 piculs (20, 000 tons) of coffee crops were lost, with an estimated loss of US $112 million. In addition, the country reported the loss of at least about 30 hectares of coffee crops, while in the western coffee producing areas, many harvested coffee could not be transported due to the destruction of roads, roads and bridges, and the actual loss may be even greater.

However, there is also good news. Recently, the Foreign Agricultural Service (FAS) of the United States Department of Agriculture released the latest coffee production forecast for Colombia 2024. Due to favorable weather conditions and better agronomic practices adopted by farmers to reduce the impact of climate change, coffee production in the new season is expected to be 12.9 million bags, an increase of 1.1% over last year, and the export volume will reach 12 million bags.

Even if Colombia reports that production growth is good for the market, it is not enough to make up for production cuts in Brazil and many Central American countries, and the La Nina phenomenon, which is likely to occur at the end of the year, will further disrupt the multinational climate, so international coffee prices will remain high and there will be no downward trend in the short term.

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