Volcafe, one of the world's top coffee traders, anticipates that Robusta coffee beans used for instant coffee will be in short supply for the fourth consecutive year in the future as Vietnam, a major producer, continues to face dry weather.
According to a report by Volcafe, Vietnam's production of Robusta coffee beans in 2024/25 is expected to be 24 million bags, the lowest level in 13 years. Insufficient rainfall in Vietnam has caused “irreversible damage” to coffee flowers, and the decline in fertilizer usage and the expansion of durian trees at the cost of sacrificing the area under coffee bean cultivation have also put pressure on the production of Robusta coffee beans.
Volcafe predicts that the 2024/25 global supply gap for Robusta beans will be 4.6 million bags, down from 9 million bags in the previous year. Supply shortages have driven up the price of Robusta coffee beans this year. London-traded Robusta coffee bean futures rose to a new intraday high above 4,300 US dollars per ton at the end of April.
Although the price of Robusta coffee bean futures has declined somewhat since then, Volcafe stated in the report: “To solve the current shortage of Robusta coffee beans, higher prices are needed to pressure demand or push buyers to use more Arabica beans.”
Volcafe also pointed out in the report that demand for Robusta beans in emerging markets has not weakened due to the increasing flow of instant coffee, but once the impact of the price increase is transferred, demand is expected to slow down. The trader said that in the past six months, industry demand has begun to shift to Arabica beans, but a larger shift or more weakening in demand is needed to eliminate the tight supply of Robusta beans.
Brazil's record exports last year, the world's second-largest producer of Robusta beans, are offsetting the shortage of Robusta coffee beans in Asia, but the country's 2024/25 production of Robusta beans is also expected to decline. Volcafe notes that the severe droughts and heatwaves last fall reduced the crop's potential.
In contrast, the supply prospects for Arabica coffee beans are brighter, and global supply is expected to still exceed consumption in 2024/25. However, Volcafe said that due to bad weather affecting crops in Brazil, Vietnam and Central America, “the surplus has actually disappeared,” leaving only 700,000 tons.