Jan 10 / Laleska Moda

Vietnamese exports drop in 2024, while Brazilian already reached a new record

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  • Vietnamese coffee exports fell in 2024, reflecting lower availability in the 23/24 season and a delay in the 24/25 harvest. A reduction in planted area in 2023 and adverse weather conditions recently led to lower production, with stocks also falling to low levels.

  • Producers' reluctance to sell at the end of the year likely contributed to the export trend.

  • On the other hand, some analyses suggest that demand for the Vietnamese bean was also more tepid in the second half of the year, probably reflecting the increased availability and competitiveness of Brazilian conilon.

  • At the same time, Brazilian exports are at record levels, partly due to the increased conilon demand in 2024. Last year's cumulative Arabica and Conilon figures are already at record levels and are likely to push 24/25 season exports to a new peak.

Vietnamese exports drop in 2024, while Brazilian already reached a new record

According to the Vietnamese government, the country's coffee exports reached 22.3 million bags in 2024, down 17.2% from 2023. This decline is likely to be a combination of several factors, including lower stocks in the 23/24 season, a delay in the 24/25 harvest, producers' reluctance to sell and possibly lower demand for the Vietnamese bean. Despite the drop in volume, it is worth noting that coffee export earnings rose by 32.5% to $5.6 billion in 2024, thanks to higher prices last year.

Despite this positive aspect, lower production and the depletion of stocks in recent harvests negatively impacted Vietnam's exports in the 23/24 season and led to a slow start to the 24/25 cycle. Cumulative exports in the 24/25 season (Oct-Dec/24) saw a 38.7% decline compared to the same period in the 23/24 season. Only 3.9 million bags were shipped in the last three months, compared to 6.4 million bags last season, with a particularly sharp decline between November and December. While we still expect a slight increase in exports this season, this will mainly reflect higher imports from origins such as Brazil, as production is still limited and the harvest delayed.

Following the decline in area and consequent production in the 23/24 season, the 24/25 cycle was hampered by dry and hot weather in early 2024, while the harvest was delayed by abundant rainfall and cyclones in the second half of 2024. In addition, producers were capitalized and waited for the beans to be more mature to start harvesting this season. As a result, the harvest only started to pick up pace in December, limiting the amount of new beans coming onto the market.

Vietnam: Coffee Exports (‘000 bags)

Source: Refinitiv, ICO

Vietnam: Supply and Demand for Coffee (M bags)

Source: Hedgepoint

However, even though field work accelerated towards the end of last year, many farmers remained reluctant to sell large volumes to the market. Not only did the holiday season affect marketing, but while prices were still high in the final weeks of the year, they remain below previous records, with many growers waiting for better prices (see also our special report on Vietnam for more information).

On the other hand, demand for Vietnamese beans was also moderate in the second half of 2024. The strong presence of Brazil's Conilon in global exports in 2024 and logistical constraints in Asia could also have had a negative impact on Vietnamese exports. According to the International Coffee Organization, traffic in the Suez Canal remains restricted, lengthening shipping times from Asian markets to European destinations and increasing costs. This also contributes to the greater competitiveness of Brazil's Conilon over Vietnam's Robusta. In addition, the depreciation of the BRL in recent months has contributed to higher export volumes of Brazilian coffee.

Vietnam: Domestic Coffee Price (VND/kg)

Source: Refinitiv

Brazil: Green Coffee Exports (Jan-Nov)  (M bags)

Source: Cecafé

In this scenario, it is no surprise that Brazilian coffee exports remain strong and are likely to end 2024 and the 24/25 season with a new record. According to Cecafé data, from January to November, Brazil shipped 42.67 million bags of green coffee - up 34.3% on 2023 - with Conilon already at 8.69 million bags (up 107.3% on 2023) and Arabica at 33.97 million bags (up 23.2%), both records.

The cumulative figures for 24/25 (Apr-Nov) are also already higher than for any other entire season (Apr-Mar), reflecting the change in the global coffee chain in recent years. So, while we expect Brazilian shipments to slow in the coming months - due to higher availability in Vietnam, Central America, and Colombia with the harvest in those countries and higher farmer sales in Brazil - the Brazilian 24/25 season is likely to end with record exports of conilon and arabica.

Brazil: Arabica Coffee Exports (M bags)

Source: Cecafé, Hedgepoint

Brazil: Conilon Coffee Exports (000’ bags)

Source: Cecafé, Hedgepoint

In terms of prices, however, we still expect a more volatile and bullish scenario in early 2025, especially given the still limited global supply and the uncertainties surrounding the Brazilian 25/26 season. As mentioned above, while the availability of other origins is expected to increase in the first half of 2025, most producing countries (except for Colombia) are expected to have smaller crops in 24/25. In addition, many farmers are more capitalized and will hold their beans until a desired price is achieved.

In Brazil, while exports are heading for record levels, farmer sales were already high at the end of 2024 and stocks are likely to be at their lowest, which could also limit farmer trading volumes in 2025, at least until the start of the 25/26 season. The next cycle also points to a more limited supply: while we expect an increase in conilon production (22.6 million bags), which could prevent robusta from reaching new record prices, arabica could remain on the low side (42.6 million bags), limiting the recovery of stocks and keeping prices closer to 300 c/lb.

In Summary

A decline in production in recent cycles and lower stocks led to a drop in Vietnamese coffee exports in 2024 and a slow start to the 24/25 season. In addition, this season's harvest was also delayed by adverse weather conditions, and producers continue to show less interest in new sales than in previous seasons, waiting for higher prices.

On the other hand, Brazilian coffee exports continue to reach record levels, driven in part by higher conilon demand in 2024. While the country also faces logistical constraints, a depreciated BRL and higher costs in Asia (also driven by logistical issues) continue to highlight the greater competitiveness of the Brazilian bean relative to the Vietnamese.

Despite increasing Brazilian exports, prices should remain volatile and supported at least until the start of the 25/26 season, especially for Arabica. Not only are supplies from other origins limited, but Brazilian farmers are also likely to continue withdrawing and the likelihood of a still small Brazilian 25/26 season looms over the coffee market.

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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