Coffee bean exports plunged 33.7% in July compared with the same period last year.

Coffee bean exports plummeted in July

Coffee exports plunged 33.7% in July from a year earlier to 1.9 million bags (1 bag = 60kg), mainly due to low inventories and the lack of newly harvested coffee beans to catch up with exports, according to figures released by the Brazilian Coffee Export Association on Aug. 11.

Affected by this, the price of international coffee futures has increased slightly. On Aug. 16, the price of the American coffee futures contract peaked at 137.5 cents per pound on the day, the highest for the year. However, Jia Ben, a senior analyst in the coffee industry of Kunming Fumin Import and Export Co., Ltd., told the Daily Economic News that even if it rises slightly in the short term, the price of coffee beans is still at an all-time low in terms of the year, less than 50% of the high price.

In addition, the Rio Olympics coincide with the Brazilian coffee season, and according to the Brazilian Ministry of Agriculture, the production of Brazilian coffee beans will reach 52 million standard bags (1 standard bag = 60kg) in 2016, which will break the record of 50.8 million bags in 2012 and set a new high.

Affected by Brazil's expected increase in production, the first estimate of the International Coffee Organization (ICO) for the 2015 Coffee 16 year (since October last year) shows that global coffee production is expected to increase by 2 million to 143.4 million bales (8.604 million tons) compared with 141.4 million bales last year.

However, increasing production is difficult to increase income, and the bumper harvest of coffee beans leads to a drop in prices.

"High-yield expectations bring about changes in supply and demand, leading to a fall in prices." Jia Ben told the Daily Business News that at the beginning of this year, the price of American coffee futures contract fell as low as 117 cents per pound, but so far it has only rebounded to about 137 cents per pound, which means it has risen 20 cents per pound since the beginning of the year.

Looking at the trend of coffee futures prices in recent years, the reporter found that after reaching a peak of 308.9 cents / pound in 2011, coffee futures prices plummeted for three consecutive years, rising slightly in 2014 (up 50 per cent year on year), but then fell back again in 2015. There has been no big boost so far.

The "Butterfly effect" affects Yunnan Canon

Global economic integration and changes in Brazil's coffee industry have also affected farmers in Yunnan, China.

It is reported that at present, about 98% of the domestic coffee is produced in Yunnan, and Yunnan has formed the acquisition practice of generally subtracting 10-20 cents from the futures price of American coffee. Only the price of Yunnan coffee is lower than that of American coffee futures in the world.

Jia Ben told the Daily Economic News that although international futures prices have risen slightly recently, the average trading price is not high on an annual basis.

According to the statistics of Yunnan Coffee Association, the average price of coffee beans purchased by enterprises from farmers this season is between 5.9 yuan and 6.4 yuan per pound, while the market trade price is maintained at about 7.3 yuan per pound. According to the prevailing international view, farmers do not make money when the price of coffee is less than $1 per pound.

Brazilian coffee bean exports have plummeted and international coffee futures prices have risen slightly, which originally meant more money for farmers. However, due to the difference in longitude and latitude, there is a difference of about half a year between Yunnan coffee season and Brazilian coffee season. At present, most Yunnan coffee beans have been traded and exported.

In July this year, the Yunnan Coffee Association said that the depressed market situation led to the low enthusiasm of enterprises or farmers in picking, and there was still a phenomenon of abandoning harvesting and management in Honghe, Baoshan and other places, bringing certain losses to coffee production in the province.

In addition, according to the statistics at the end of this season, Jia Ben told the Daily Business News that due to the influence of Rain Water's weather, the harvest quality of Yunnan coffee beans this season was not so ideal, especially when there were problems in the drying process.

Jia Ben said that as a result, the final sales price of many farmers this season is much lower than the 10-20 cents price of American coffee futures in previous years, and even some coffee beans are unsalable.

The potential of China's coffee market is promising.

As far as the whole coffee market is concerned, at present, whether it is coffee cultivation or coffee consumption, China's industry position appears to be a bit awkward.

As a producing area, China's coffee bean production is limited, accounting for less than 1% of the world's coffee consumption; in terms of coffee consumption, Jia Ben found that China's coffee bean consumption may not be as optimistic as some institutions predicted (some agencies forecast that China's coffee bean demand will reach 180000 tons in 2015). According to its estimates, the annual consumption of the domestic coffee market is only about 80, 000 tons.

Jia Ben believes that coffee consumption in China is still a minority consumption, although the annual coffee consumption is growing at 10% to 20%, but because the base is too small, it will take 10 years or more to finally reach the level of a large coffee consumer.

However, the huge population and huge consumption potential still make many coffee giants and new enterprises optimistic about the Chinese coffee market in the future. In addition, all parts of the country have also maintained great interest in the establishment of coffee trading centers.

On June 16 this year, the Chongqing Coffee Trading Center announced its opening; in July 2015, the Shanghai Free Trade Zone Coffee Trading Center was unveiled; as early as July 2014, Yunnan Coffee Trading Center and Kunming Coffee Trading Center were listed in Pu'er and Kunming respectively, and put forward the goal of building the world's third largest coffee exchange.

"the serious polarization of coffee consumption in China is the main situation at present." Jia Ben said that the second level refers to the two kinds of consumption of cheap instant coffee and boutique coffee chains represented by brands such as Starbucks. If the era comes when ordinary people drink a cup of coffee with only a few yuan like tea, it means that China has really become a big coffee consumer.