Extreme weather has had a significant impact on cocoa and coffee bean yields, and prices continue to climb

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China Research Network

Extreme weather has had a significant impact on cocoa and coffee bean yields, driving up futures prices for these two soft commodities. Due to supply constraints, the demand for these commodities has not decreased, resulting in prices continuing to climb.

The surge in the price of ICE cocoa futures is a clear example of this. The price has risen more than 240% over the past year and breached the $10,000 per tonne mark for the first time intraday on March 26. Although the price has since retreated, it is still at a high level. This reflects concerns about cocoa supply and the expectation that prices may continue to rise in the future.

West Africa, the world's main source of cocoa production, has also recently been hit hard by extreme weather and disease. Côte d'Ivoire and Ghana, the two largest cocoa producers in the region, have been severely affected in their production. Heavy rains and the spread of black pod disease have taken a toll on cocoa cultivation, while poor road conditions have further affected cocoa transport and exports. The combination of these factors has exacerbated the tension over the global supply of cocoa.

Similar to cocoa, coffee bean yields are affected by extreme weather. Extreme weather events, such as El Niño, have led to frequent droughts and heavy rains in coffee-growing regions, adversely affecting the growth and fruiting of coffee trees. Production in some major coffee-producing countries has already shown a downward trend, which has further contributed to the increase in coffee bean prices.

In this case, financial institutions such as Citibank expect that there is still room for the price of cocoa and coffee beans to rise. As global demand for both commodities continues to grow, while supply is constrained by factors such as weather, the trend of rising prices is likely to continue for some time.

However, this also presents challenges and opportunities for related industries. For downstream businesses such as chocolate manufacturers and coffee chains, rising raw material prices will increase production costs and may require adjustments to product pricing. For investors, the cocoa and coffee bean futures markets offer potential investment opportunities.

Overall, the impact of extreme weather on cocoa and coffee bean production cannot be ignored, and the market should pay close attention to the relevant developments to develop a sound production and investment strategy. At the same time, it is also necessary to strengthen the response and prevention of global issues such as climate change to reduce their adverse impact on agricultural production.

According to the analysis of the China Research Industry Research Institute:

Robusta beans for May delivery rose 4% local time on Wednesday to settle at $3,812 a tonne, the highest price since the futures contract began trading in 2008. On Thursday, it retreated slightly to $3,766.

The president of the Vietnam Coffee Association said that now farmers and purchasing agents have low stocks, indicating tight supply. Some coffee importers are concerned that the shortage of irrigation water due to unfavourable weather conditions in Vietnam may also affect the production of coffee beans in the next season. The tight supply of Robusta beans has also boosted demand for comparatively better Arabica beans.

On Wednesday local time, the price of Arabica coffee bean futures for May delivery broke through the $2 mark per pound, hitting a new high this year. The price continued to rise on Thursday local time, closing at about $2.07.

Brazil is the largest producer of Arabica beans, and local grower brokers say there has been a strong demand for a relatively low-quality portion of Arabica beans in recent times, as roasters can use them to replace Robusta beans to make blends.

Citibank expects cocoa and coffee bean prices to still have room to rise. Cocoa is expected to stabilize between US$9,000 and US$10,000 per tonne over the next three to four weeks, while futures for Arabica beans this year are expected to be around US$1.88 to US$2.15 per pound, with further forecasts expected if production tightens.

The results of the survey on the current state of the coffee market are as follows: Market size and growth: In recent years, the size of the coffee market has continued to grow and is expected to maintain rapid growth in the next few years. The size of China's coffee market has reached 600 billion yuan in 2023 and is expected to reach 1,000 billion yuan in 2025. This is mainly due to the increasing acceptance of coffee culture by consumers, as well as the trend of daily and functional coffee consumption.

Market structure and brand concentration: The coffee market shows a trend of leading concentration. Brands such as Luckin and Cudi have outstanding performance in terms of the number of stores and market expansion, and also have significant advantages in supply chain construction and product innovation.

By building a strong supply chain system, these brands have achieved dimensionality reduction against miscellaneous stores and further consolidated their market position. In addition, some potential brands are also gradually concentrating on "leading" in the process of development.

Trade Status: China's total coffee import and export trade volume and total value continued to grow, especially the import volume increased significantly. With the rapid growth of demand for coffee in the domestic market, China's coffee import and export trade has changed from net exports to net imports, and the net import volume has shown a normal growth trend. This reflects the strong demand and increased import dependence of the domestic coffee consumption market.

Talent development and innovation: With the booming coffee market, the demand for talent in related fields is also expanding. The Ministry of Education has added new majors such as coffee science and engineering, aiming to train more professionals to support the development of the industry. At the same time, the coffee industry is constantly innovating, including taste innovation, product diversification, and integration with other food sectors, providing consumers with more choices and a better consumer experience.

To sum up, the current situation of the coffee market is characterized by continuous expansion of market scale, obvious trend of brand concentration, good trade situation, and continuous promotion of talent training and innovation. However, it is also important to note that the market is becoming increasingly competitive, and brands need to continuously improve their capabilities to respond to market changes. At the same time, it is also necessary to pay attention to the changes in consumer demand and the development of emerging markets to expand more development space.

The road of standardization, high-quality, manor and diversification has become the main line of the development of the coffee industry in Menglian County. Today, Menglian County has basically built a full-chain coffee production and processing system, created a number of excellent enterprises and local brands, and the development of the specialty coffee industry has achieved initial results. The coffee beans are becoming more and more famous, and the manorization of Menglian Coffee has also started a new journey.

In order to vigorously develop the rate of coffee specialization, Menglian County will continue to optimize the coffee industry environment, optimize the industrial layout, enhance the stamina of industrial development, improve the quality of industrial development, and grasp the integration of coffee tourism to achieve another breakthrough in the development of the coffee industry. Open various social platforms, Yunnan Coffee also has a popular check-in place "Baoshan".

In the 2023-2024 production season, 130,000 mu of fresh coffee fruits in Baoshan City have ushered in a bumper harvest one after another, and with the continuous improvement of coffee quality, the income of coffee farmers has also increased year by year. The high-quality rate has become a magic weapon for coffee farmers to get rich and increase income.

Baoshan's coffee estates have also become unique and have become a sample of the integration of local agriculture and tourism. Many enterprises have built coffee estates, integrating coffee planting, processing and sales, production observation, creative experience, and leisure and vacation. In 2023, the five specialty coffee estates in Baoshan City will receive a total of 58,000 tourists and earn more than 96 million yuan.

Many people in charge of the manor said that since the beginning of the year, the income of the three industries of the manor has been significantly higher than that of the same period last year, and the tour of Yunnan coffee production area has attracted much attention on various platforms. The multiple values of a coffee bean are fully reflected in Baoshan.

On the basis of summarizing the development process of China's coffee bean industry, the report combines various factors in the new era to give a detailed and prudent prediction and demonstration of the development trend of China's coffee bean industry. The report is detailed, rich in charts, both in-depth analysis and intuitive comparison, for coffee bean companies to gain insight into opportunities in the fierce market competition, and to accurately and timely adjust business strategies for their own environment.

If you want to know more about the detailed analysis of the coffee bean industry, you can click to view the research report of Zhongyan Puhua

Pay attention to the headline number "China Research Institute of Puhua Research Institute", reply to "free report" by private message, you can get a free report, come and get it quickly!