"Please Lower Coffee Prices"...Robusta Bean Prices Hit Record High Amid Logistics Crisis

January Futures Price Hits Record High of $3,443 per Ton
Vietnam, the Largest Producer, Sees Inventory Decline
Additional Price Increase Due to Red Sea Logistics Crisis

The price of Robusta coffee bean futures has reached an all-time high. This is due to the combined effects of declining coffee stocks in major Robusta-producing countries and the logistics crisis in the Red Sea.

According to the ICE Futures Exchange on the 18th (local time), the January futures price for Robusta coffee beans traded on the 17th was $3,443 per ton (t), marking the highest price since records began in 2008. Although the Robusta coffee futures price traded at $3,316 per ton on that day, down 3.7% from the previous day, it has risen 7% so far this year, continuing its upward trend. The premium Robusta futures price surged more than 30% this month alone.

This upward trend is noteworthy as it occurred amid a 60% surge last year due to reduced stocks in Vietnam, the world's largest Robusta producer. Poor crop yields caused by El Ni?o and the harvesting of alternative crops led to a 30% decrease in Vietnam's coffee harvest last year, fueling the rise in Robusta coffee bean prices.

Additionally, due to Middle East risks, commercial vessels from Vietnam have avoided the Suez Canal connected to the Red Sea and instead used alternative routes to evade airstrikes by the Houthi rebels, resulting in increased freight costs that have contributed to further price hikes. Phan Minh Thong, chairman of Phuc Sinh, Vietnam's largest spice export company, told Bloomberg News, "Shipping costs for (coffee) products from Asia to Europe have nearly increased sevenfold to $4,000 per container since the Red Sea attacks." Despite offensives by coalition forces including the United States and the United Kingdom against the Yemeni pro-Iranian Houthi rebels, attacks on civilian vessels by the Houthis have intensified, suggesting that coffee bean prices are likely to remain high for the time being.

Robusta coffee beans have a strong bitter taste and are mainly used in instant coffee. They are also used in some low-cost cafes.

Some speculate that Brazil will benefit from this situation, as Vietnam's reduced harvest and logistics disruptions create a ripple effect. John Goodwin, senior commodity analyst at Arrowstream, predicted, "The combination of Red Sea risks and drought in Southeast Asia could permanently shift the global Robusta market share to Brazil." Brazil is the world's largest producer of Arabica, considered a premium variety, and may even come to dominate the Robusta market.

With coffee bean prices soaring, coffee prices may rise as well. However, many expect this will not immediately lead to reduced consumption. Coffee is a beverage that allows consumers to relieve stress in daily life without spending a lot of money. The International Coffee Organization (ICO) forecasts that global coffee consumption will grow by about 1-2% annually until 2030.