Adverse weather conditions brought on by El Niño in Southeast Asia’s coffee-growing regions could further pressure already tight global robusta coffee supplies.
Robusta front month futures prices reached a record high in late December — and continue to hover just below that peak — after El Niño set in in mid-2023 and helped to sink Indonesia’s robusta production for the year by some 20%. Although Vietnam’s production was largely flat year on year, the country’s robusta stocks are at the second-lowest level in eight years.
Robusta prices also got a big lift after Houthi rebels in Yemen began attacking ships entering the Red Sea, starting around December 7. Much of the robusta headed to Europe and the US East Coast from Southeast Asia typically traverses the Red Sea and Suez Canal.
Vietnam is the world’s largest robusta coffee producer, followed by Brazil and Indonesia. Robusta beans account for about 40% of world coffee production, with Arabica making up the rest.
Gro Drought Index readings for Indonesia’s coffee-growing areas have been rising steadily since mid-2023 and are currently at the third-highest level for this time of year in at least two decades, according to Gro’s Climate Risk Navigator for Agriculture. Soil moisture levels are the lowest since at least 2010, as seen in this Navigator display.
Conditions could improve for Indonesian coffee, perhaps in time for the 2024/25 crop. Gro’s medium- to long-term forecast for Indonesia’s South Sumatra province, a key robusta growing region, calls for a rebound in rainfall to above historically average levels through much of 2024, although temperatures are predicted to exceed normal readings. However, forecasts made months in advance contain a high degree of uncertainty.
Vietnam’s coffee regions mainly escaped the adverse impact of El Niño in 2023. However, precipitation in some of the main robusta growing provinces has dropped below normal levels in the past month and Gro Drought Index readings have edged higher since the last week of December, as seen in this Gro Navigator display. The medium-term outlook calls for above-average temperatures and below-average precipitation in the coming months, Gro’s forecasts show.
El Niño events tend to bring below-average rainfall and above-normal temperatures to many parts of Southeast Asia, often depressing coffee production. Hot, dry conditions during the region’s critical coffee flowering period, which occurs during March-April, can be particularly damaging. El Niño conditions are forecast to continue at least until the Northern Hemisphere’s spring or summer 2024.
During the 2015/16 El Niño, Indonesia’s robusta production fell by 12% from a year earlier amid near-record drought conditions. In Vietnam, water shortages in 2015/16 cut robusta production by 8% compared to the previous year.