The global coffee market is currently facing high inventories, especially for arabica and robusta coffee. What are the impacts of this increase? Let’s explore the article below.
Causes of Increased Coffee Supply
Last week, arabica coffee inventories monitored by ICE reached a two-and-a-half-year high of 991,080 bags, while robusta coffee inventories also reached a two-and-a-half-month high of 4,355 lots. This increase is creating clear impacts on both coffee supply and prices.
Brazil has always been the leading country in terms of area and output in the global coffee market.
The increase in coffee supply mainly comes from major producing countries, with Brazil and Vietnam playing a key role. In 2023, Brazil—the world’s largest producer of arabica coffee—recorded a strong crop with high output, thanks to favorable weather conditions. Similarly, Vietnam, the largest producer of robusta coffee, also had a high-yield crop. This has pushed the coffee supply to high levels, causing stocks at exchanges such as ICE to increase significantly.
Impacts of Increased Supply
Impact on Coffee Prices
At ICE, arabica coffee prices have been affected by the rise in inventories, while robusta coffee has also followed a downward trend. Meanwhile, factors related to coffee consumption have not shown a strong increase.
Arabica and robusta are the two most popular coffee varieties used in coffee production and brewing.
Although coffee remains a popular consumer product, some major markets—particularly in Europe and the US—are showing signs of stabilizing their consumption habits, without the same surge in demand as in previous years.
Impact of Climate Change
Climate change, especially extreme weather events like droughts or heavy rain, could affect future coffee crops. Additionally, disruptions to the supply chain, due to transportation issues or global inflation, could also have unforeseen impacts on the coffee market.
High Coffee Inventories and Forecasts for the Vietnamese Coffee Industry
In the short term, global coffee inventories are expected to remain high if production - especially from countries like Brazil and Vietnam - continues at stable levels. Vietnam, the world’s leading producer of robusta coffee, is likely to maintain high output in the coming years, thanks to favorable weather conditions and improvements in farming techniques. However, if demand in major markets such as the EU, the US, and Asian countries increases toward the end of the year - particularly during the festive seasons - coffee prices may see a recovery.
Vietnamese Coffee: The World's Second-Largest Coffee Exporter
At the same time, adjustments to production by producers, especially in Vietnam, to maintain a supply-demand balance will play an important role in determining global coffee prices and inventories. If policies supporting the coffee industry in Vietnam continue, this could help producers maintain stable output and improve quality, thereby preserving the position of Vietnamese coffee in the global market.
