Tag: Vietnam

Historic Drop in Certified Coffee Stocks Threatens Global Market Stability

Posted on by Qahwa World

Dubai – Qahwa World

The global coffee market is entering a period of heightened uncertainty as certified coffee stocks fall to their lowest level in years, signaling tightening supply chains and growing pressure on prices. According to the International Coffee Organization’s (ICO) September 2025 Coffee Market Report, both Arabica and Robusta certified inventories saw steep declines, raising alarm among traders and producers about the sustainability of global coffee flows.

The ICO reported that certified Arabica stocks in the United States dropped by 19.3%, falling to 0.66 million 60-kg bags, while certified Robusta stocks in London declined by 4.3% to 1.08 million bags. The organization described these figures as a “clear indicator of tightening supply,” warning that if this trend continues, it could lead to further market volatility and stronger upward pressure on coffee prices into 2026.

The decline in certified stocks comes at a time when global coffee prices are already at a two-year high. The ICO Composite Indicator Price (I-CIP) averaged 324.62 US cents per pound in September — up 9.3% from August and 25.4% year-on-year. This sustained rally reflects a combination of supply shortages, export delays, and speculative momentum, according to the report. Analysts also note that the depletion of certified stocks is a major driver behind the surge, as roasters and traders draw down existing inventories to meet ongoing demand.

In Brazil, the world’s largest coffee producer and exporter, the situation remains complex. Despite a healthy harvest, export performance continues to weaken, with the Brazilian Coffee Exporters Council (Cecafé) reporting a tenth consecutive monthly decline. Shipments have been slowed by logistical congestion at the Port of Santos and delayed customs procedures, resulting in slower replenishment of certified stocks. Much of the crop, although harvested, remains stored domestically awaiting transport — a factor that continues to strain global availability.

Colombia, the world’s top producer of washed Arabica, is also struggling with weather disruptions in key coffee-growing regions and infrastructure setbacks that have limited its export capacity. Meanwhile, Vietnam, the largest Robusta supplier, has maintained stable production but faces supply chain bottlenecks that delay shipments to major consuming markets, particularly Europe and North America.

The ICO emphasized that these combined factors have created a fragile equilibrium in which global coffee demand remains resilient, but the flow of physical supply is insufficient to keep inventories stable. “The rate of certified stock depletion is now nearing levels not seen since 2021,” the report warned, adding that the balance between consumption and production is increasingly difficult to maintain amid logistical and policy-related challenges.

Trade policies are adding further complications. The United States’ 50% import tariff on coffee, still in place as of September 2025, continues to weigh heavily on trade volumes. Many importers have avoided purchasing new shipments at elevated costs, instead relying on existing certified reserves. This has accelerated the drawdown of available stock, pushing certified inventories closer to critical thresholds.

At the same time, monetary policy decisions have influenced speculative activity across commodity markets. The Federal Reserve’s recent 25-basis-point rate cut — its first since 2024 — triggered renewed investor interest in coffee futures, pushing prices even higher. The report noted that this speculative demand has intensified the pressure on physical stocks, as traders anticipate continued price gains and hedge against potential shortages.

The ICO also pointed to regulatory uncertainty in Europe as a factor contributing to the decline in certified inventories. Exporters are recalibrating their shipment schedules due to the forthcoming EU Deforestation Regulation (EUDR), which mandates traceability and geolocation data for coffee imports. While the European Commission has signaled a potential one-year delay in enforcement, many traders are opting to postpone shipments until compliance frameworks are clarified, further limiting short-term supply availability.

Market analysts caution that the combination of depleted stocks, policy delays, and persistent trade restrictions could lead to supply shortages in early 2026 if current trends persist. “The market is walking a fine line,” one analyst cited by the ICO noted. “With certified inventories at record lows, even minor disruptions — whether from weather, logistics, or policy shifts — could have an outsized impact on prices.”

This tightening supply scenario has already been reflected in the futures markets. ICE Arabica prices in New York rose by 11.5% in September, averaging 366.31 US cents per pound, while ICE Robusta prices in London climbed 8.9% to 197.56 US cents per pound. The price differential between the two markets widened by 14.7% to 168.75 US cents per pound, the highest level recorded in 2025. The ICO said the widening gap highlights uneven stock conditions and structural imbalances between Arabica and Robusta markets.

Furthermore, intra-day price volatility increased to 13.8%, compared to 10.6% in August, underscoring how thin inventories amplify market sensitivity to short-term developments. The report noted that low stock levels make the market more reactive to speculative trading, currency fluctuations, and export data releases.

Despite these challenges, some optimism remains tied to upcoming harvests in Central America and East Africa, which could provide temporary relief to global supplies. However, the ICO cautioned that recovery will likely be slow, as high fertilizer and labor costs continue to limit farm investment and productivity gains across several producing countries.

Ultimately, the ICO concluded that the historic decline in certified coffee stocks represents more than a temporary fluctuation — it reflects a deep structural imbalance in the global coffee economy. Persistent trade barriers, logistical delays, and delayed regulatory decisions have combined to restrict availability at a time when global demand remains robust. The report warned that unless export performance and stock replenishment improve by early 2026, the market could face an extended period of high prices and intensified volatility.

As the global coffee sector navigates this critical juncture, the ICO urged stakeholders — from producers to importers — to focus on efficient supply chain management, sustainable farming practices, and regulatory coordination to restore stability to the market. Without such measures, the world’s coffee supply chain risks remaining on edge well into the coming year.

Global Coffee Market Reacts to Tariffs, Rate Cuts, and EU Regulation Uncertainty

Posted on by Qahwa World

Dubai – Qahwa World

The global coffee market navigated a turbulent September as trade tensions, monetary policy shifts, and regulatory uncertainty reshaped investor sentiment and price dynamics. According to the International Coffee Organization’s (ICO) latest Coffee Market Report for September 2025, the sector was influenced by a combination of U.S. tariff policy, an interest rate cut by the Federal Reserve, and developments surrounding the European Union’s Deforestation Regulation (EUDR). Together, these factors created a complex environment of both optimism and caution across producing and consuming regions.

The month began with heightened uncertainty following the decision by the United States to maintain its 50% import tariff on coffee. This came despite a presidential executive order, issued on 8 September, that excluded several commodities from the existing tariff regime. Coffee, however, remained absent from the exemption list, as it is not considered a product that can be sufficiently produced within the U.S. to meet domestic demand. The policy stance kept traders and importers on edge, particularly in light of already tight global supplies and rising domestic roasting costs.

The ICO report noted that the continued imposition of tariffs has dampened export momentum from major producing countries, particularly Brazil, which remains the world’s largest coffee supplier. Exporters faced not only the direct cost of tariffs but also indirect consequences such as higher insurance premiums and delayed shipments. The United States, typically the second-largest destination for Brazilian coffee after Germany, saw imports fall sharply in August — down 46% year-on-year and 26% month-on-month, according to data from Cecafé.

However, as the month progressed, a diplomatic thaw between Washington and Brasília offered a glimmer of optimism. Meetings between senior officials from both countries, held on the sidelines of the United Nations General Assembly in New York, were interpreted by market analysts as a potential first step toward resolving trade tensions. Though no formal changes were announced, the dialogue provided reassurance to traders that punitive tariffs might be reviewed later in the year, especially if inflationary pressure continues to ease in the United States.

Adding to the month’s market developments, the U.S. Federal Reserve cut its benchmark interest rate by 25 basis points on 17 September — its first such move since early 2024. The decision aimed to support economic growth amid signs of slowing consumer spending and lower manufacturing output. For coffee traders, the rate cut brought mixed implications. On one hand, cheaper borrowing encouraged speculative activity in commodity markets, which helped lift prices. On the other, the stronger U.S. dollar that followed the announcement increased costs for buyers using other currencies, especially in emerging markets.

The ICO observed that the daily volatility of the ICO Composite Indicator Price (I-CIP) rose to 13.8% in September, up from 11% the previous month, partly driven by the interplay of monetary and trade factors. The organization emphasized that such fluctuations reflect not only speculation but also genuine uncertainty about the future of trade flows and regulatory frameworks that govern the industry.

In Europe, a different kind of uncertainty unfolded. The European Commissioner for Environment, Oceans, and Fisheries, responsible for overseeing the Deforestation Regulation (EUDR), expressed concern over the readiness of the EU’s technical system for tracing commodities such as coffee, cocoa, and palm oil. The Commissioner admitted that the digital platform designed to monitor compliance might not be fully operational in time for the regulation’s official start date in January 2026. As a result, Brussels is now considering a one-year postponement of the EUDR’s implementation.

This potential delay was met with relief from coffee-producing nations and exporters, many of whom have voiced apprehension over the costs and logistical burdens of compliance. The regulation, adopted in 2023, requires companies importing into the EU to prove that their products do not contribute to deforestation or forest degradation. For coffee, that means exporters must provide precise geolocation data for every farm and ensure traceability across the supply chain. While the regulation aims to promote sustainable trade, several producing countries, including Ethiopia, Uganda, and Honduras, have warned that smaller farmers could be excluded from the European market if compliance deadlines remain too strict.

Market participants see the proposed delay as a temporary reprieve. “It gives exporters and cooperatives valuable time to adjust and strengthen traceability systems,” the ICO noted. However, the organization also cautioned that postponement does not remove the long-term challenge of compliance. Producers who fail to invest in sustainable certification and farm-level data systems risk losing access to the world’s most regulated and high-value coffee market.

By the end of September, the combined effects of tariffs, monetary easing, and policy uncertainty continued to shape market sentiment. The ICO Composite Indicator Price averaged 324.62 US cents per pound, up 9.3% from August, marking the highest level in two years. Yet, behind the price surge lay diverging regional realities: while exporters in Vietnam and Colombia benefited from strong demand and competitive logistics, producers in Brazil and Central America faced rising export costs and political tension around trade access.

The report concluded that these intersecting economic and regulatory developments have pushed the coffee industry into a phase of structural adaptation. With monetary policy softening in the United States, trade negotiations cautiously reopening, and the EU potentially adjusting its sustainability timeline, the final quarter of 2025 is expected to test the industry’s resilience. Analysts agree that while prices may remain high in the short term, long-term stability will depend on how swiftly producers, traders, and regulators can align under a more predictable and sustainable framework.

As the ICO noted, the coffee market of late 2025 is no longer defined solely by supply and demand but by the policies, regulations, and economic instruments that govern it. The cup of coffee on the global stage has never been more entangled with diplomacy, finance, and environmental accountability.

Roasted and Soluble Coffee Exports Decline in July 2025

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Dubai, September 6, 2025 (Qahwa World) – The International Coffee Organization’s (ICO) August 2025 report has revealed a significant decline in exports of both roasted and soluble coffee in July, underscoring new challenges facing the global coffee sector as it navigates volatile prices, shifting demand, and rising production costs. The data highlights not only pressure on green coffee but also on finished products that reach consumers directly, raising concerns about structural changes in the industry.

According to the report, roasted coffee exports fell by a dramatic 63%, reaching only 30,000 bags compared to 81,000 bags in July 2024. This steep contraction marks one of the sharpest drops in recent years for a category that reflects direct consumer demand for value-added coffee products. Soluble coffee exports also registered a decline, albeit more modest, down 5% to 1.08 million bags from 1.13 million bags a year earlier. While less severe, the slowdown in soluble exports is significant because this category has long been considered one of the most resilient and widely consumed segments in global markets, particularly in emerging economies.

Analysts attribute the decline in roasted coffee exports to several interlinked factors. The most immediate is the surge in global coffee prices, with the ICO Composite Indicator Price (I-CIP) climbing by 14.6% in August to 297.05 US cents per pound, its highest level since 2024. Such historic price levels have curbed demand for high-cost roasted products, especially in advanced markets such as Europe and North America, where consumers are already grappling with inflation and higher living expenses. At the same time, exporters face mounting challenges from rising production and shipping costs. Energy, labor, and logistics expenses have all increased in recent months, eroding margins and forcing some companies to scale back international shipments in favor of local markets where conditions are more stable.

For soluble coffee, the 5% drop highlights a different dynamic. Traditionally, this segment has thrived in developing and price-sensitive markets due to its affordability and convenience. Yet even here, demand appears to be shifting. In mature markets, growth has slowed as consumers gravitate toward specialty coffee and fresh roasted options, reflecting a broader trend toward quality and experience rather than convenience alone. In competitive producing countries such as Vietnam and India, rising production capacity has intensified rivalry, putting pressure on exporters to maintain prices and market share. Younger generations in many countries are also seeking more diverse coffee experiences, leading to gradual erosion in the dominance of instant coffee.

The decline in both roasted and soluble exports has broader economic implications. It signals that pressure in the coffee sector is not limited to green coffee or raw supply but extends throughout the value chain. Combined with the ICO’s data showing global coffee stocks at their lowest level since April 2024, the contraction in finished product exports adds another layer of vulnerability to a market already characterized by price volatility and supply uncertainty. Experts warn that if these trends persist, the industry could face an extended period of turbulence, with higher prices for consumers and tighter margins for producers.

Still, opportunities remain in certain regions. Demand for soluble coffee continues to expand in parts of Africa and Asia, albeit at a slower pace, offering some relief for exporters. However, regulatory challenges such as the upcoming EU Deforestation Regulation (EUDR), set to take effect at the end of 2025, are expected to add new hurdles for suppliers attempting to maintain access to key European markets. For roasted coffee, niche segments such as specialty blends and locally branded products may offer pathways to sustain growth, but producers will need to adapt quickly to changing consumer preferences.

The ICO emphasized that roasted and soluble coffee exports should be monitored closely as indicators of global consumption trends. If the declines seen in July extend over the coming months, it could mark the beginning of a deeper shift in how coffee is traded and consumed worldwide. In that scenario, volume alone would no longer be the main metric of success; value-added innovation, consumer engagement, and adaptability to regulatory and market changes would become critical to survival. For now, the combined 63% plunge in roasted coffee exports and the 5% drop in soluble shipments serve as a stark reminder that the challenges facing the coffee sector go beyond farms and warehouses and reach all the way to the consumer’s cup.

Global Coffee Stocks Fall to Lowest Level Since April 2024

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Dubai, September 4, 2025 (Qahwa World) – The International Coffee Organization’s (ICO) August 2025 report has revealed a sharp decline in global coffee stocks, falling to their lowest level since April 2024. The drop in inventories comes just weeks after prices reached a historic high, highlighting a fragile market caught between soaring demand and tightening supply.

According to the ICO, certified Arabica stocks held at the New York Exchange dropped 7.9% to 0.77 million bags, marking a 16-month low. Robusta inventories at the London Exchange also fell by 4.6%, standing at 1.13 million bags. The simultaneous reduction across both major coffee types signals a broad squeeze on available supply.

Why Stocks Are Falling

Analysts point to several reasons behind the decline:

  • Weaker export flows – Global green coffee exports fell for the sixth consecutive month in July 2025, tightening supplies into key markets.

  • Crop concerns – Brazil, the world’s top producer, reported larger bean sizes but weaker density, which reduced overall yield estimates.

  • Climate risks – A frost in Brazil earlier this year damaged an estimated half a million bags.

  • Regulatory pressure – European roasters have been stockpiling ahead of the EU Deforestation Regulation (EUDR) that comes into force at the end of 2025, drawing beans out of certified warehouses into private storage.

Connection to Soaring Prices

The fall in stocks coincided with a dramatic rise in prices. In August, the ICO Composite Indicator Price (I-CIP) climbed 14.6% to 297.05 US cents per pound, the highest since 2024. With inventories shrinking, the likelihood of further price volatility is increasing, especially if supply disruptions persist.

Regional Dynamics

  • South America posted the steepest decline, with exports down 18.5%, driven by a 28.6% fall in Brazil.

  • Asia & Oceania moved in the opposite direction, growing exports 22.7%, led by Vietnam (+29.4%) and Indonesia (+20.4%).

  • Africa also contributed positively, with exports rising 4.4%, thanks to strong performance in Uganda (+51.4%) and Ethiopia (+12.5%).

  • Mexico & Central America recorded moderate growth of 7.2%, helping to diversify global supply, though not enough to offset South America’s losses.

What It Means for the Market

Industry experts warn that the current drawdown in stocks leaves the coffee market more vulnerable to external shocks. Further weather events in Brazil or Vietnam could deepen the supply gap, while the EUDR may slow exports to Europe. Rising shipping and labor costs add another layer of pressure on the supply chain, feeding into higher costs for roasters and consumers alike.

Outlook

The ICO emphasized that stock levels will remain a critical indicator for the market in the coming months. Any further declines could trigger another round of price surges, prolonging uncertainty for producers, traders, and consumers. With prices already at historic highs and inventories at multi-year lows, coffee is entering one of its most volatile periods in recent memory

ICO: Coffee Prices Hit Historic Surge as Exports Decline

Posted on by Qahwa World

Dubai, September 3, 2025 (Qahwa World) – The International Coffee Organization (ICO) in its August 2025 report revealed unprecedented shifts in the global coffee market, with the ICO Composite Indicator Price (I-CIP) rising by 14.6% to 297.05 US cents per pound – its highest level since 2024 and 24.3% higher year-on-year. At the same time, the report highlighted that global green coffee exports continued to contract for the sixth consecutive month, underscoring the dual pressure of soaring prices and shrinking supplies.

Historic Price Surge
According to the ICO, all coffee groups recorded strong gains. Robusta led the surge with a 19.1% increase to 199.13 US cents per pound, while Colombian Milds, Brazilian Naturals, and Other Milds rose between 12% and 14%. Futures prices also jumped sharply, with New York contracts up 13.6% and London contracts up 18.2%, signaling broad-based upward momentum.

Market Drivers
The report identified multiple factors fueling the rally:

  • The United States’ 50% tariff on Brazilian coffee, slowing down commercialization.

  • Brazil’s government support through the Funcafé fund, allocating BRL 6.8 billion (USD 1.29 billion) to finance the 2025/26 harvest.

  • Reports of lower bean density in Brazil despite large screen size, reducing crop estimates.

  • European roasters stockpiling ahead of the EU’s Deforestation Regulation (EUDR) deadline in December 2025.

  • A minor frost in Brazil damaging up to half a million bags.

  • Roasters increasing long positions in futures markets to hedge against further price hikes.

Export Downturn
The ICO report also showed global green coffee exports reaching 10.3 million bags in July 2025, down 0.7% from July 2024. South America posted the steepest decline (-18.5%), driven by Brazil’s 28.6% fall in shipments.

Regional Contrasts

  • Asia & Oceania exports surged by 22.7%, led by Vietnam (+29.4%) and Indonesia (+20.4%).

  • Africa’s exports rose 4.4%, with Uganda (+51.4%) and Ethiopia (+12.5%) as key contributors.

  • Mexico & Central America posted a moderate increase of 7.2%.

Looking Ahead
The ICO emphasized that the combination of rising prices and falling exports places the global coffee market in a volatile phase. With the EUDR coming into effect by year-end and climate-related risks looming over major producers, coffee is set to remain one of the most vulnerable agricultural commodities to both economic and environmental shocks.

Nestlé Pours $100 Million into Expanding Packaged Coffee Output in Vietnam

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Nestlé Vietnam is set to invest $100 million to enhance the processing capabilities of its Tri An coffee facility in Dong Nai, effectively doubling its production capacity. This move brings Nestlé’s total investment in the location to over $500 million. The augmentation of the Tri An production site aims to meet the rising local demand for premium coffee brands such as Nescafé, Nespresso, Starbucks, and Blue Bottle. Simultaneously, it reinforces Vietnam’s position as a high-value coffee production and supply hub on the global stage.

According to a Nestlé press release, the investment underscores the company’s commitment to long-term engagement in Vietnam. The expansion is expected to enable the factory to cater to domestic consumer needs while tapping into export potential, transforming Vietnam into a prominent supplier of high-value coffee worldwide. The Tri An production site currently ships packaged coffee products to more than 29 countries, emphasizing its global reach.

Jacob Binu, General Director of Nestlé Vietnam, expressed confidence that the project, once operational, would double the factory’s capacity, satisfying local market demands and effectively leveraging export opportunities. Nestlé, which initiated operations in Vietnam in 1993 with a representative office in Ho Chi Minh City, launched the Tri An site in 2013, including a Nescafé Dolce Gusto capsule production line in 2018.

Nestlé, headquartered in Vevey, has invested nearly $830 million in its Vietnamese ventures to date. The company operates four production sites, with three located in Dong Nai, and manages two distribution centers.