Mar 7 / Laleska Moda

Vietnam's exports rise, while Indonesia's shipments already exceed 23/24

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  • Vietnam's coffee exports have increased since the end of last year, following the seasonal pattern with the conclusion of the 24/25 harvest. In general, however, shipments remain lower than in 23/24, reflecting both lower stocks and production and the withdrawal of producers.

  • In Indonesia, exports have been more robust, with the 24/25 cumulative levels higher than 23/24. Shipments are in line with our expectations given the recovery in production this season.

  • For Indonesia next crop, we expect a further recovery in production, given a more favorable climate and the increased capitalization of producers after years of higher prices. The country's 25/26 crop is expected to be harvested between April and May, which could ease the supply situation for Robusta.

  • However, the market remains volatile due to concerns over the Brazilian 25/26 crop. The unfavorable weather in recent weeks could negatively impact production. On the other hand, forecasts of a return of the rains next week and the negative impact of higher prices on coffee demand could limit further advances.

Vietnam's exports rise, while Indonesia's shipments already exceed 23/24

Coffee exports in Southeast Asia have shown some reaction in recent months. In the case of Vietnam, shipments followed the seasonal pattern, with an increase between late 2024 and early 2025, due to the greater availability of 24/25 beans as the 24/25 harvest came to a close. February exports were even above average. Nevertheless, cumulative shipments for the season (Oct-Feb) stand at 11.44 M bags, still below the 13.24 M bags for the same period in 23/24. This result was in line with expectations, given slightly lower production in 24/25 and lower carryover stocks. In addition, price volatility in recent months and uncertainties about the Brazilian crop have led many Vietnamese producers to hold onto their goods, waiting for higher prices.

In Indonesia, exports have been above the historical average since October, mainly due to the recovery in production in 24/25 and attractive prices. Cumulative shipments for the season (Apr-Jan) totaled 6.49 M bags, up from 5.41 M bags exported in the same period of 23/24. It is possible that shipments may decline slightly in the coming months given the proximity of the 25/26 harvest, but, because of the greater availability of coffee and the pace of exports to date, we expect total volume to recover to 7.9 M bags in the 24/25 season, up 15% on 23/24.Center-South of the country, where the main coffee-growing regions are located.

Vietnam: Coffee Exports (‘000 bags)

Source: Refinitiv, ICO

Indonesia: Coffee Exports (‘000 bags)

Source: Refinitiv, ICO

For the 25/26 season, although we expect lower initial stocks, our models point to a further recovery in production as a result of higher rainfall in 2024 and early 2025. Our initial estimate for the Indonesian crop is 11.6 M bags, up 3.7% from 24/25. On the other hand, given current coffee prices, domestic consumption and exports are expected to decline slightly, albeit within the average of recent years.

Indonesia: Cumulative Monthly Precipitation (mm)

Source: GADAS

Indonesia: Supply and Demand (M bags)

Source: Hedgepoint

For the 25/26 season, although we expect lower initial stocks, our models point to a further recovery in production as a result of higher rainfall in 2024 and early 2025. Our initial estimate for the Indonesian crop is 11.6 M bags, up 3.7% from 24/25. On the other hand, given current coffee prices, domestic consumption and exports are expected to decline slightly, albeit within the average of recent years.

It's worth noting that the Indonesian harvest usually starts in April, close to the Brazilian season, which could lead to greater availability in the coming months, at least on the Robusta side, and put downward pressure on prices. Nevertheless, the market is likely to remain extremely volatile given the uncertainties surrounding Brazilian Arabica production. This week, the May/25 contract rallied back to 410 c/lb on the back of adverse weather in Brazil and a lack of Brazilian sellers (due to Carnival), with Robusta contracts following suit.

However, futures have retreated in recent days on forecasts of rain in the country in the coming week and fears of the impact of high prices on coffee demand. While traders and roasters have been buying only what they need to meet their obligations, the retail sector has been reluctant to absorb the new coffee prices, making negotiations difficult and increasing uncertainty in the sector.

In Summary

Vietnam's exports have risen in recent months but remain below historical averages and the 23/24 levels - a season of lower exports. The decline reflects the still limited supply in the country, combined with a greater withdrawal by farmers this season, who are capitalized and not in a hurry to sell their product. On the other hand, Indonesia is already showing a recovery in shipments, reflecting higher production in the 24/25 season and more attractive prices.

For Indonesia's 25/26 crop, we expect a further recovery in production to 11.6 M bags given the favorable weather in recent months. On the other hand, we expect a slight decline in exports and domestic consumption in the country due to higher coffee prices.

The current price scenario could affect not only the Asian country but also the world. Although volatility and high prices may persist in the coming months due to uncertainties surrounding the Brazilian 25/26 Arabica crop, the market has already given warnings about demand, with traders and roasters reducing their purchases to minimum levels and reports of difficulties in negotiating with retailers.

Weekly Report — Coffee

Written by Laleska Moda

laleska.moda@hedgepointglobal.com

Reviewed by Lívea Coda
livea.coda@hedgepointglobal.com
www.hedgepointglobal.com

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