Robusta Coffee Hits Record High Amid Global Supply Squeeze
Robusta coffee futures have surged to their highest closing price on record, underscoring growing concerns about global supply shortages. The November ICE Robusta coffee contract climbed 0.87% to reach new heights, while its nearest-futures contract posted an all-time high.
This unprecedented price surge comes amid mounting worries over coffee production in key growing regions. Vietnam, the world’s largest Robusta producer, is facing severe drought conditions that threaten to impact its coffee output significantly. The country’s July coffee exports plummeted 29.3% year-on-year, with year-to-date exports down 12.4%, according to the General Department of Vietnam Customs.
Coffee trader Volcafe has sounded the alarm, projecting that Vietnam’s 2024/25 Robusta crop could fall to just 24 million bags, the lowest in 13 years. The firm attributes this decline to “irreversible damage” to coffee blossoms caused by poor rainfall. Consequently, Volcafe anticipates a global Robusta deficit of 4.6 million bags in 2024/25, marking the fourth consecutive year of shortfalls.
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Adding to the supply squeeze, Vietnam’s agriculture department forecasts a 20% drop in coffee production for the 2023/24 crop year, potentially resulting in the smallest harvest in four years. The Vietnam Coffee Association echoes this sentiment, predicting a 20% year-on-year decline in exports.
While Robusta prices soar, the broader coffee market presents a mixed picture. Arabica coffee futures experienced a slight dip, influenced by a stronger dollar and profit-taking following recent rallies. However, concerns persist about dry conditions in Brazil, the world’s top coffee producer, which could affect the upcoming flowering season for Arabica trees.
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