Bad news for those who love a good continental breakfast. Cocoa is becoming more expensive (and much more expensive), unrefined sugar and fat are increasing, and the price of Robusta coffee is also increasing, reaching historic levels in the price charts. The International Coffee Organization acknowledged in its February market report that the highest values have been reached in almost three decades, and other institutions such as the World Bank are already predicting that these values will remain “high” for at least the rest of the year. year. . To understand this rise, it is necessary to look at the sky, the market and the forecasts.
These are the reasons why coffee is a little more bitter today.
Robusta coffee is on the rise. Robusta coffee futures in London, an international benchmark, were around $3,400 a tonne this week, reaching an all-time high near $3,500 at the start of the month. To get an idea of what this means, just look at the chart containing the investment platform’s values for the last fifteen years.
Futures have never climbed to peaks this high since 2009. In fact, they experienced significant growth of nearly 60% last year alone. Five days I recently pulled out my calculator and concluded that in a span of fifteen years, the amount of grain of the Robusta variety has skyrocketed by almost 167%.
Status of Arabica. The situation is slightly different when it comes to the higher value Arabica variety, known as Coffee C. Its price today is significantly above the level it marked in the fall of 2023, but is still below the level it reached in the summer of 2022 or 2011. Nikkei pointed out last week that its futures are in New York, which is its big reference. The highest price in the last 14 months was in December, and in recent days operations have closed at 24% higher prices than last September.
In any case, the World Bank shows its confidence that arabica prices will fall in 2024 and stabilize in 2025, unlike Robusta, which predicts that arabica prices will remain “high” this year before falling next year.
It’s a matter of variety. They are all coffee, but Robusta and Arabica are two varieties with profound differences that are already visible in the same shape and pattern of the bean. Except for the taste, of course. Robusta is rounder, has a more bitter touch and a much higher concentration of caffeine. For this reason, Arabica is generally considered the more delicate option, is associated with superior quality, and is often known as the gourmet coffee bean.
There are equally notable differences at the level of production: Robusta is more hardy, produces higher yields and allows cheaper exploitation than Arabica grain, which requires very specific conditions of moisture, temperature and altitude. Current cultivation of Robusta is mainly concentrated in Southeast Asia, especially Vietnam; Volume production of Arabica beans begins mainly in Brazil, Colombia and Ethiopia.
Most imported. The company itself states: “The Arabica variety is the most valuable as it produces a more aromatic and high-quality coffee, but brands such as Bonka use Robusta to make their own blends and produce high-quality coffees.” AECafé, the Spanish association of the industry, explains that the Robusta variety is by far the most imported variety in Spain. Although its last report confirmed Arabica’s increase in market share, Robusta still represented 58.6% of the total in 2022. Approximately 33% of imported green coffee from the Robusta variety also came from the same country: Vietnam.
increasing demand. This is one of the keys that explains the current scenario: demand. Statista charts reflect an almost continuous increase in global coffee consumption over the past decade, reaching 178.5 million 60-kilogram bags in 2022-2023. Just 10 years ago, between 2012 and 2013, this figure did not even reach 147 million 60 kg sacks.
And the indicator promises to continue climbing. Nikkei talks about a 20% increase in global consumption in 2023-2024 compared to 2013-2014, with particularly pronounced growth in Asia. The ICO estimates that 3.1 million 60-kilogram bags were reached in China alone in 2022-2023; This represents an increase of 15 percent compared to the previous year.
Click on the image to go to the tweet.
Spain’s green coffee imports by variety.
From luxury goods to daily consumption. “In Asia, coffee was largely a luxury product for wealthy people, but with population growth and economic development, the middle class has expanded and the number of people enjoying coffee every day has increased,” says Nikkei Taisuke Horie, beverage manager at Marubeni department. In any case, the World Bank points out that a “significant increase” in supply of around seven million bags is expected this season, mainly from Arabica grain producers such as Brazil, Colombia and Ethiopia.
Vietnam production. As noted in the AECafé report, Vietnam holds a key position on the Robusta variety map. And production in the Southeast Asian country is certainly not at its best; The decrease in agricultural areas, adverse weather conditions (especially attention is drawn to the effects of El Niño) and the decrease in productivity in certain regions, to which is added the increase in local consumption.
Just at the end of last year, the Bloomberg agency predicted that the country would produce between 1.6 and 1.7 million tons of grain; this was significantly below the 1.78 million achieved the previous year. Kaifarm also specifically points out “unpredictable weather conditions”, with erratic rainfall and temperature fluctuations damaging certain coffee-growing regions of the country.
At an overall level, Statista estimates that around 76.7 million 60kg sacks of Robusta were produced across the planet in the 2022-2023 season. This figure represents a decrease of just over one million bags compared to the previous campaign. “Forecasts show that this decline will continue in the 2023-2024 season,” the platform elaborates, going further and estimating that approximately 74.1 million sacks of Robusta will be produced in this campaign.
The (complex) climate problem. Another important key to explaining the panorama facing the global coffee industry. A Vietnamese farmer recently said, “We have to dig deeper and deeper to find water. In some years it is not enough for irrigation, and in other years there is a large surplus.” There are already those who say that climatic challenges will increase the yield of Robusta grain relative to Arabica, which is more sensitive and requires very special conditions for its cultivation, and this may affect its price.
Vietnam has already demonstrated its willingness to promote Robusta diversity in a world marked by rising temperatures. “People will have to find an alternative supply,” Pjham Thi Diep Giang, director of one of the country’s largest producers, told the Swiss Information Agency a year ago. Although it is more durable, Robusta is not free from harmful substances in any case. changes in climate. Today, Bloomberg warns that Vietnam’s export coffee supplies will fall further this year, in a scenario marked by temperature changes, drought and farmers opting to switch to other crops.
Cover image | Milo Miloezger (Unsplash), World Bank and AECafé
in Xataka | The world’s main coffee producing countries in this striking chart
Source: Xatak Android
Ashley Johnson is a science writer for “Div Bracket”. With a background in the natural sciences and a passion for exploring the mysteries of the universe, she provides in-depth coverage of the latest scientific developments.