It is not a secret that this year many countries around the globe are suffering from extreme weather. Heavy rains and severe droughts keep affecting multiple crops, including coffee. There is no weather balance at all. Poorer harvests will inevitable result in higher prices.
Brazil, the world’s biggest producer and exporter of the “Arabica” coffee, has already announced that its coffee harvest will be poor this year and that it will have to cut the production of coffee by as much as 30%. However, the figures may boost later.
Vietnam , a major producer and exporter of “Robusta”, followed Brazil’s example, thus announcing production cuts. The production may decline by 10% this season.
1.3 million tons – that is the harvest Vietnam expects to gather this year. The previous forecast was 1.45 million tons. The global demand for “Robusta” is fairly high. This season, it has already increased by 330K tons. However, at this point, the global production is still expected to outpace the demand by nearly 30K tons.
Last week, Robusta prices reached $2224 per ton in London (NYSE Liffe). The demand for cheap coffee is growing. The overall export has been boosted by 11%. However, the long-term forecast is gloomy. In 2015, the production of coffee in Vietnam may decline down to 1.08 million tons. Vietnam is planning to replace ageing plants.
For reference, Robusta is grown in Africa and some Asian region.
The following charts reflects the price fluctuations seen in the market of coffee this season.
