Specialists talk about global market and future of coffee supply

Challenging scenario in global coffee market brings significant impacts in supply and dynamics of production chain. Beforehand, coffee production and price might be influenced by climate issues and logistics bottlenecks. This scene, among other themes, has been discussed by experts of the sector in the panel “Coffee Market Outlook: O Futuro do Abastecimento (The Future of Supply)”, at the 10^th Coffee Dinner & Summit. 

Promoted by the Brazilian Coffee Exporters Council – CECAFÉ, the encounter was held on Friday morning, 4^th July, at the Royal Palm Hall, in Campinas/SP, Brazil.

Cooxupé’s Commercial Superintendent, Luiz Fernando dos Reis, was the moderator of the panel, along with Charles Chiapolino, Global Head of Coffee Research at the Geneva-based Louis Deryfus Company. As well as Germán Bahamón Jaramillo, CEO of the Colombian Coffee Growers Federation, and Oscar Schaps, President of LATAM Division of StoneX Financial Inc..

Global Market

Luiz Fernando dos Reis has conducted the debate, emphasizing the key role of Brazil in the future of world’s coffee supply. “Global coffee market has been through a period of transformation, with challenges in climate and logistics, impacting production and prices”, he stated.

“We are the world’s biggest producer, consistently. Then, due to the large participation in the market, any significant variation in production affects international prices directly”, completed.

Perspectives of the sector

Firstly, Germán Bahamón Jaramillo stressed the importance of communication within the sector. In this regard, the CEO of the Colombian Coffee Growers Federation emphasized that the country is present to strengthen the partnership with Brazil in the coffee market. Thus, he aims to enhance production and meet the growing global demand.

Next, he contextualized the steady increase in demand, which tends to keep growing. Namely, considering that there are 2.5 billion people yet to get into coffee consumption in the coming years, in countries that, traditionally, are not consumers of the beverage. “If we stay in this rhythm of growth until 2030, global consumption shall reach 200 million bags of coffee. By these means, what we need to do is to understand who is going to produce it and how we can change it into a sustainable effort. Not only by the environmental side, but also financially, in order to make the industry profitable from farm to retailers”, indicated Germán.

Coffee market has been constantly growing. Thus Colombia, with near 150 thousand coffee farmers, seeks to raise productivity, and to explore new planting areas to reach 20 million bags. “The main focus is still in quality, in order to maintain Colombia as a reliable provider for the global industry”, he related.

Conclusively, Germán underlined that, despite the rise of prices, the consumption of coffee is stable, indicating a ‘non-elastic market’. In his opinion, ‘forcing the drop of prices is not favorable to coffee farming’. “There is no sustainability if we do not decide to build the value from bottom to top”, he pointed.

Increase in productivity

Global Head of Coffee Research at Louis Deryfus Company, Charles Chiapolino highlighted that the global demand for the product is resilient. In spite of record prices in the begining of the year. Henceforth, Brazil leads this movement, as its production of Arabica represents increasing 38% of world coffee.

In advance, he estimates that Brazil will be able to add 23 million 60 Kg bags to the market in the next 10 years. Knowingly, considering that the country has raised its production in 9 million bags during the former decade.

Nevertheless, the specialist warned on topics regarding infrastructure, and investments to the sector towards production uplift. “Are you ready for this? We know that producers have been investing in their production. But, do we have enough warehouses, as well as logistics, trucks, ports, funding for that purpose?”, he said.

According to Chiapolino, the success of Brazil is due to its human and financial capital, availability of land, technology and well-established ecosystem for the agribusiness.

Challenges to the country

However, Louis Dreyfus’ Head of Coffee Research has pondered that Brazil has challenges ahead: resilience, global warmth, logistics and sustainability. As well as adaption to the changes in consumption.

“As Brazil becomes even more important than it currently is, it will have more responsibilities. During past 50 years, 9 out of 10 market spikes have been boosted by the country’s production. We had frosts, droughts, amidst other issues, for instance. So, in order to be resilient, we need to prepare for what have already happened in recent years”, he concluded.

Offer

President of LATAM Division of StoneX Financial Inc., Oscar Schaps mentioned that Brazil has great impact in global coffee market. During his presentation in 10^th Coffee Dinner & Summit, he remarked that productive cycles have been fast after the pandemic, with lower production bringing prices upwards. On the other hand, there is high incentive to raise production, which may lead to a drop in prices. The guest has also considered climate uncertainties.

Additionally, he said that the recent rise in prices had been already leveraging production, based on the number of active nurseries and coffee seedlings sold. “Brazil will need to enhance its production in coming years, especially for Conillon. Though, there are concerns that productive improvement may surpass coffee consumption, which has been slow after the pandemic”, he commented.

He has also expressed his concern about the delay of development in Africa, and limitations of Central America.

Stocks

During the panel, the specialists asserted that the recomposition of stocks of coffee will take at least two more good crops. That is to say due to successive shortfalls in offer and demand. However, in spite of high prices, the consumption keeps resilient. The outlook points to global challenges in the sector, with prices in historical highs. And it indicates that, even a big crop expected to 2026, Brazil may not relief consumers immediately.

“I think we’re still in a moment that is not comfortable. I don’t believe in development of stock of coffee from the current year to the next”, said Luiz Fernando dos Reis, Commercial Superintendent at Cooxupé.

Following the same thought, Charles Chiapolino mentioned that “recomposing stocks will be hard after years of deficits, which will require at least two years of very good crops.”

Germán Bahamón has agreed, stressing the drop of stocks due to strong consumption. Conclusively, Oscar Schaps noted that the structure of inverted market poses difficulties in building up stocks, and he expects that Brazil’s 2026 crop might help improving the situation.