used in instant coffee and as a blend in espressos
Cocoa’s head-spinning rally has captured much attention this year, but coffee is having a moment too. The cost of robusta, the bean variety used in instant drinks and some espresso blends, recently reached the highest in more than four decades.1)
Indonesia, the third-ranked robusta producer
Vietnam coffee exports continue to benefit from the rise in Robusta coffee prices, primarily due to the supply shortages.2)
Robusta coffee prices extended losses for a seventh consecutive session yesterday on prospects of improving weather conditions this week in major producer Vietnam.3)
Also supporting prices is high demand for robusta beans. Typically, a rise in robusta prices encourages a shift toward using more arabica in blends, but that isn’t happening at this time, Andrea Illy, chairman of Italian coffee roaster Illycaffe SpA, said Tuesday on Bloomberg Television.4)
“Coffee prices for robusta heavy product blends remain at a substantial discount to arabica containing blends and thereby consumers seeking value continue to choose the former for now,” the report said.5)
London robusta futures, a global benchmark, have reached a record high, reflecting the mounting pressures on the coffee supply chain.6)
Record exports in the prior season from Brazil, the world’s second-largest robusta producer, are offsetting the robusta supply shortfall in Asia, but output from the country is also expected to drop in 2024/25. Severe drought and heat waves last fall reduced crop potential, Volcafe said.7)
Meanwhile, harvests in Indonesia are expected to start this month or the following, marking a “substantial delay from the norm” due to droughts caused by El Nino, according to a Friday report from the US Department of Agriculture.8) 9)
Better weather is expected to support a recovery in output next season for Indonesia, the world’s fourth-biggest coffee producer, which primarily grows the robusta variety. Production is seen rising 14% to about 10 million bags in 2024, the Association of Indonesian Coffee Exporters and Industries said Monday.10)