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How Robust prices reached their historical high
2024-06-19 16:48
HOW ROBUST PRICES REACHED THEIR HISTORICAL HIGH
The attitude to this type of coffee is changing
The attitude to this type of coffee is changing
In recent years, Robusta prices have updated the historical maximum. In June 2023, the International Coffee Organization reported that the average price of this type of coffee increased by 7.8% to $132.12 per pound, the highest level in 28 years. Since the beginning of 2024, Robust prices have increased weekly, and by the beginning of February, they had reached an absolute maximum in the last 29 years.
In the material, we explain why the cost of Robusta is growing and how such changes in the market will affect the coffee industry as a whole. We relied on the publication of Perfect Daily Grind to prepare the text.
In the material, we explain why the cost of Robusta is growing and how such changes in the market will affect the coffee industry as a whole. We relied on the publication of Perfect Daily Grind to prepare the text.
Robusta: what kind of coffee is this?
Robusta, or Coffea canephora, is a type of coffee, just like Arabica. It was first discovered in Uganda and the Democratic Republic of the Congo. The main grain producers are Vietnam, Brazil and Indonesia.
Robusta grows in the warm climate of the tropics. The rest of the plant is unpretentious: it can be found on mountain and flat plantations, it is resistant to heat, showers and coffee diseases. This type of coffee is genetically diverse, which can potentially have a positive effect on the range of grains. Also, the advantages of Robusta include its high yield, as it grows three to four times higher than Arabica.
Robusta, or Coffea canephora, is a type of coffee, just like Arabica. It was first discovered in Uganda and the Democratic Republic of the Congo. The main grain producers are Vietnam, Brazil and Indonesia.
Robusta grows in the warm climate of the tropics. The rest of the plant is unpretentious: it can be found on mountain and flat plantations, it is resistant to heat, showers and coffee diseases. This type of coffee is genetically diverse, which can potentially have a positive effect on the range of grains. Also, the advantages of Robusta include its high yield, as it grows three to four times higher than Arabica.
Robusta trees grow up to 13 m high. © perfectdailygrind.com
However, it is widely believed in the coffee industry that Robusta's taste can never be compared to Arabica. Despite the density, intensity and stable cream, espresso based on this type of coffee is tart, bitter and flat. That's because compared to Arabica, Robusta has few lipids and sugars, but a lot of caffeine and chlorogenic acid.
Robustu is used in the production of commercial instant coffee. Also, roasters add it to Arabica, make mixtures. Thus, companies strive to partially preserve the quality of products and their prices. For example, classic Italian coffee is prepared on the basis of mixtures of Robusta and Arabica.
At the same time, Robust prices have been rising in recent years. We analyze further the factors of such changes in the market.
Why Robusta production is declining
The cost of Robusta is increasing as the supply of this type of grain on the market has decreased. On January 30, 2024, Robusta stocks fell to a record low. Experts identified two factors that determined the current situation in the market.
Difficulties in communication with East Asia. Global trade routes, especially maritime ones, are affected by the political crisis on the Red Sea. Thus, the Asian regions of origin of Robusta were cut off from European markets. At the same time, Vietnam is the main supplier of Robusta in the world. Exports in this country grew: over the past year, their indicators increased by 47%. However, due to logistical difficulties, roasters now wait a long time to deliver Asian grain or pay more for insurance and transportation of goods.
Ryan Delaney, founder and chief analyst of Coffee Trading Academy, clarifies: "Transport difficulties in East Asia have recently aggravated the situation. In the limited supply conditions on the open market, people turn to certified stocks and the Brazilian variety of Robusta-Conillon. This leads to a steady reduction in stocks of certified grain and an increase in supplies from Brazil."
Climate change in Brazil. Drought in Robusta regions in Brazil has had a negative impact on yields. At the same time, the country of origin ranks second in terms of supply after Vietnam.
Sahra Nguyen, CEO and founder of the roasting company Nguyen Coffee Supply, reports: "Grain shortages due to drought, along with growing demand, are leading to increased cost. In addition, the shortage of Arabica associated with climate change will make Robusta more in demand, as roasting companies will need to diversify their supply. Also, in this situation, they can start stocking up on grain, which will increase prices.
Robust prices are rising not only because of the deficit but also because of the growing demand for grain.
Robustu is used in the production of commercial instant coffee. Also, roasters add it to Arabica, make mixtures. Thus, companies strive to partially preserve the quality of products and their prices. For example, classic Italian coffee is prepared on the basis of mixtures of Robusta and Arabica.
At the same time, Robust prices have been rising in recent years. We analyze further the factors of such changes in the market.
Why Robusta production is declining
The cost of Robusta is increasing as the supply of this type of grain on the market has decreased. On January 30, 2024, Robusta stocks fell to a record low. Experts identified two factors that determined the current situation in the market.
Difficulties in communication with East Asia. Global trade routes, especially maritime ones, are affected by the political crisis on the Red Sea. Thus, the Asian regions of origin of Robusta were cut off from European markets. At the same time, Vietnam is the main supplier of Robusta in the world. Exports in this country grew: over the past year, their indicators increased by 47%. However, due to logistical difficulties, roasters now wait a long time to deliver Asian grain or pay more for insurance and transportation of goods.
Ryan Delaney, founder and chief analyst of Coffee Trading Academy, clarifies: "Transport difficulties in East Asia have recently aggravated the situation. In the limited supply conditions on the open market, people turn to certified stocks and the Brazilian variety of Robusta-Conillon. This leads to a steady reduction in stocks of certified grain and an increase in supplies from Brazil."
Climate change in Brazil. Drought in Robusta regions in Brazil has had a negative impact on yields. At the same time, the country of origin ranks second in terms of supply after Vietnam.
Sahra Nguyen, CEO and founder of the roasting company Nguyen Coffee Supply, reports: "Grain shortages due to drought, along with growing demand, are leading to increased cost. In addition, the shortage of Arabica associated with climate change will make Robusta more in demand, as roasting companies will need to diversify their supply. Also, in this situation, they can start stocking up on grain, which will increase prices.
Robust prices are rising not only because of the deficit but also because of the growing demand for grain.
Why is the demand for Robusta growing?
In recent years, not only manufacturers of instant coffee and mixtures have begun to be interested in Robusta. Companies in the specialty segment also began to use this type of coffee.
Basically, Robusta is added to the blends. Roasting companies began distributing mixtures because they were convinced that such coffee has a more stable, rich, and versatile taste than mono sort.
In recent years, not only manufacturers of instant coffee and mixtures have begun to be interested in Robusta. Companies in the specialty segment also began to use this type of coffee.
Basically, Robusta is added to the blends. Roasting companies began distributing mixtures because they were convinced that such coffee has a more stable, rich, and versatile taste than mono sort.
In the specialty segment, Robusta is used not only to optimize prices but also to balance taste. © perfectdailygrind.com
Robusta began to be included in the blends, as its quality began to improve. There was even a special segment marked fine. The coffee community develops standards for this type of coffee and thus motivates Robusta manufacturers to improve their products.
According to Sahra Nguyen, the industry has reached a turning point: people understand that there is no bad coffee, there is poor care for coffee trees. Participants are increasingly discussing sustainable agricultural practices, promoting innovations in Robusta research and production and sponsoring communities that grow this type of coffee. Previously, such farmers were considered marginalized and have long been trapped in economic exploitation. The expert believes that the quality of Robusta will improve when the technologies used to produce high-quality Arabica are widely distributed. These include organic cultivation, collection of ripe berries, the use of various processing methods - anaerobic, washed and hani.
According to Sahra Nguyen, the industry has reached a turning point: people understand that there is no bad coffee, there is poor care for coffee trees. Participants are increasingly discussing sustainable agricultural practices, promoting innovations in Robusta research and production and sponsoring communities that grow this type of coffee. Previously, such farmers were considered marginalized and have long been trapped in economic exploitation. The expert believes that the quality of Robusta will improve when the technologies used to produce high-quality Arabica are widely distributed. These include organic cultivation, collection of ripe berries, the use of various processing methods - anaerobic, washed and hani.
However, it is too early to expect the appearance of a variety of monosorts based on Robusta in special coffee shops. Producers only have to learn how to properly process this type of coffee. Sahra Nguyen explains: "There are many similarities in common with Arabica and Robusta, but they should be considered as two unique species with different characteristics that require an individual approach to optimize taste sensations. In other words, we should not generalize Robusta with Arabica - in terms of cultivation, processing, roasting or consumption.
We talk about how the position of Robusta in the market will change in the next block.
Robusta market development forecasts
A significant decrease in Robusta prices is not expected in the near future. In its latest report on the coffee market, the International Coffee Organization reported that stocks of certified Robusta decreased to 0.48 million 60 kg bags between December 2023 and January 2024. This figure is 15.4% less than last year. At the same time, Ryan Delaney notes the high demand for this type of coffee: "Robusta is an inexpensive alternative for roasters. Given the consistently high prices of Arabica over the past two years, this is a key factor in the demand for Robusta."
We talk about how the position of Robusta in the market will change in the next block.
Robusta market development forecasts
A significant decrease in Robusta prices is not expected in the near future. In its latest report on the coffee market, the International Coffee Organization reported that stocks of certified Robusta decreased to 0.48 million 60 kg bags between December 2023 and January 2024. This figure is 15.4% less than last year. At the same time, Ryan Delaney notes the high demand for this type of coffee: "Robusta is an inexpensive alternative for roasters. Given the consistently high prices of Arabica over the past two years, this is a key factor in the demand for Robusta."
The demand for Robusta is increasing as the production of this type of coffee continues to improve. Sahra Nguyen shares his observations: "As a person who has been roasting Robusta for five years, I have noticed that more and more roasters are turning to me for advice, because roasting this type of coffee requires a completely different approach."
The number of specialty coffee roasters who use Robusta will grow. © perfectdailygrind.com
In addition, Robusta will continue to attract the interest of the global coffee industry. For example, World Coffee Research stimulates the production of this type of coffee - in particular, it is investing in a breeding program. Such attention is important for Robusta manufacturers, who need recognition and support.
Sahra Nguyen concludes: "Robusta as a kind of coffee has always existed. But it was so neglected that now this industry has a lot of work to do. Now that the market has finally become receptive to better Robusta, farmers worldwide have the opportunity to improve the quality of their coffee. Ultimately, this will affect the well-being of their farms and help maintain their socio-economic sustainability."
Sahra Nguyen concludes: "Robusta as a kind of coffee has always existed. But it was so neglected that now this industry has a lot of work to do. Now that the market has finally become receptive to better Robusta, farmers worldwide have the opportunity to improve the quality of their coffee. Ultimately, this will affect the well-being of their farms and help maintain their socio-economic sustainability."
Results:
Robusta prices are at a record high due to the supply-demand ratio. On the one hand, logistics difficulties and climate change have adversely affected the volume of grain supplies. On the other hand, the coffee industry's attitude towards Robusta and its production is changing. Robust noticed the taste potential, which is revealed by improving grain cultivation, collection, processing, and roasting.
In the context of impending climate change, Robusta will become increasingly in demand. The development of production and improvement of the quality of this type of coffee are among the steady trends in the coffee industry, which also affects the final cost of grain.
Robusta prices are at a record high due to the supply-demand ratio. On the one hand, logistics difficulties and climate change have adversely affected the volume of grain supplies. On the other hand, the coffee industry's attitude towards Robusta and its production is changing. Robust noticed the taste potential, which is revealed by improving grain cultivation, collection, processing, and roasting.
In the context of impending climate change, Robusta will become increasingly in demand. The development of production and improvement of the quality of this type of coffee are among the steady trends in the coffee industry, which also affects the final cost of grain.