Weekly Coffee News: Asia Pacific

General market situation:

Some people need to wait for the yearly night of the Oscars to see their emotions explode in all directions. This roller-coaster feeling can be easily obtained when working in the coffee business and looking at the commodity markets for Arabica and Robusta. The arduous work needed to produce a blockbuster movie such as Oppenheimer (winning 7 Oscars) is astonishing, and we genuinely congratulate the fantastic filmmaking team. But the coffee roller-coaster of the past week is indeed reaching Oscar-like levels - at least when looking at the dramaturgy of the ups and downs. But who is writing this script? Multiple coffee-related news are hitting the market. Colombia's National Coffee Federation (FNC) released a 6.2% lower production number for February. For the first time in the past half-year, certified coffee stocks rose to more than 400,000 bags. Almost simultaneously, the Brazilian weather agency Somar Meteorologia reported good rains in Brazil's main coffee-producing region of Minas Gerais. Prices were very active. New York Arabica prices hit a 10-week-high on Thursday at 194.75 c/lb. However, the market could not hold this level and retraced back to 185.20 c/lb on Friday, closing a very volatile week with a mere 1% gain. Robusta prices in London were also highly bullish. Thursday marked a 30-year-high (!) level at 3,460 USD/MT. This is genuinely newsworthy as some natural mainstream Arabicas became cheaper than Robusta. Exports are reaching record-high figures. Additionally, the Houthi terrorist action in the Red Sea forced ships to pivot their routes from the Suez Canal to the Cape of Good Hope in South Africa, adding more costs and delays to an already distressed coffee supply chain. The week closed at 3,413 USD/MT, adding 3.6% to the previous Friday's close.

Refer to the table below to stay informed about the coffee market's ever-changing dynamics. We update this table weekly, providing the latest insights and updates.

Indonesia

On February 14th, voters in the world's third-largest democracy participated in general elections. The final results are expected in the coming weeks. However, preliminary counts indicate that Prabowo Subianto might be in the lead in replacing long-time president Joko Widodo.

The local appetite for coffee continues to grow. The steady demand has doubled the volume of imported coffee from Brazil into Indonesia in the last year.

In north Sumatra, temperatures have reached over 30°C, but finally, rain has come to freshen up the heat. In West Java, temperatures are slightly lower; scattered rains are forecasted.

In Sulawesi, Bali, and Java, the Robusta harvest is set to commence around June, while the Arabica harvest will start a few months before. In East Java, the harvest for both Robusta and Arabica is expected to recover. This should take some pressure from supply shortages. Washing stations are undergoing preparations to be ready for the upcoming crop.

International demand for Arabica remains steady. Local prices are stable as the flow of Sumatra's fly crop remains low. Volume is expected to increase as March unfolds. As for Robusta, supply remains tight.

No significant updates from the ports; logistics are operating without disruptions.

India

India's economy showed strong growth, with a GDP increase of 8.4% in the last quarter of 2023 compared to the previous year. This positive economic performance could benefit Prime Minister Narendra Modi ahead of an upcoming election, potentially securing him a third term in office. Karnataka has been experiencing high temperatures and abundant sunshine. Moving further south to Kerala, some scattered rains are expected, although temperatures remain high. Labor shortages initially impacted the harvesting pace but have since started to stabilize.

Strong international demand for Robusta keeps prices high. However, the coffee flow is rather slow due to farmers' reluctance to sell larger quantities.

There is no major news from the ports of New Mangalore or Cochin.

Vietnam

Vietnam's coffee exports in February dropped significantly compared to the same period last year. However, total exports for January and February combined increased year-on-year. Due to drought conditions, the country's agriculture department has projected a 10% decrease in coffee production for the 2023/24 crop year. Export numbers are a well-reviewed statistic in a coffee-exporting nation such as Vietnam. But what caught our attention was the import numbers: Vietnam's appetite for Brazilian coffees has increased sixfold in the last year.

Vietnam is currently in its dry season, with the main coffee districts in the central highlands experiencing dry conditions. The rainy season is expected to begin soon. Soil humidity is good, and water reservoirs are filled.

The harvest is mostly complete, and dry mills are receiving the last coffee of the season. Gia Lai's focus has shifted to preparing for the upcoming harvest. Farmers are already irrigating plantations, with attention now on the flowering and cherry development stages.

Following a period of tight supply, coffee is now flowing in good quantities and being acquired by exporters to meet short-term requirements. Demand for Robusta remains high.

Besides the persisting difficulties posed by the Red Sea crisis, there is no significant news from the port.

Papua New Guinea

Papua New Guinea has experienced unrest due to a tribal dispute between the Ambulin and Sikin tribes. The conflict was over a protracted land in the Middle Lai area of Enga Province, located over 600 km from Port Moresby, and left dozens of victims.

Rain has been reported in the Western and Eastern Highlands Provinces. There is little coffee-related news. The fly crop is pretty much complete, and the focus is now on the upcoming main crop, which is set to start in April-May across the Highlands regions.

The country faces significant fuel shortages as the only fuel supplier has issues with the local banking authorities. As a result, numerous flights are being canceled, and the movement of goods by trucks is limited.

Asia Pacific Coffee Production