**Coffee Prices Surge Driven by Adverse Weather Events**
On October 4, 2023, arabica coffee prices increased by 3.73% to $8.80 per pound, while robusta coffee prices rose by 1.76% to $84 per ton due to adverse weather conditions affecting key coffee-producing regions. Brazil’s Minas Gerais, which produces 30% of the country’s arabica crop, reported no rain over the past week, leading to bullish market sentiments. Meanwhile, typhoon Yagi struck Vietnam, the world’s largest robusta coffee producer, raising concerns about potential damage to coffee fields.
August coffee exports from Vietnam fell 14.1% year-on-year to 73,000 metric tons, and total exports from January to August were down 12.5% to 1.05 million metric tons. Additionally, the Vietnam agriculture department anticipated a 20% drop in coffee production for the 2023/24 crop year, forecasting a total of 1.472 million metric tons. Conversely, Brazil’s coffee exports in July surged by 44% year-on-year to 202,000 metric tons, contributing to a bearish outlook for arabica prices.
Both global coffee production and consumption are projected to rise: the International Coffee Organization reports a 5.8% increase in global production for 2023/24 to 178 million bags, exceeding consumption growth of 2.2% to 177 million bags, resulting in a surplus of 1 million bags. The USDA projects further increases in coffee production for 2024/25, estimating a total of 176.235 million bags globally, with arabica and robusta outputs expected to rise by 4.4% and 3.9%, respectively.
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