Hedgepoint analyzes global coffee trade flow from the perspective of the European Union

The European Coffee Federation released stock data up to April, showing an increase of 700.000 bags compared to March. With import data available until March, the drop in the first quarter is reflected in both stocks and imports. In a report, Hedgepoint Global Markets addresses destinations from the perspective of the European Union.

“It is expected, however, that April will change the scenario and explain the recovery in stocks, given that accumulated imports in the first quarter were approximately 300.000 bags below average”, says Natália Gandolphi, Coffee analyst at Hedgepoint.

“In the first half of the 2023/24 cycle, Brazil alone represented 43% of the bloc's imports, compared to 35% in the same period of 2022/23. This increase helped offset falling imports from Vietnam, Indonesia and India, which collectively fell from 33% to 26%. In the case of washed arabica, imports from Central America and Mexico consistently decreased, but this was offset by a greater share of Colombian and Peruvian coffees”, he notes.

Despite these adjustments, imports remain below normal levels until March. Looking at the accumulated result from 23/24 (Oct/23 to Mar/24), accumulated imports in the EU are 1,5 million bags below average levels and 1,8 million bags below the volume reported in the same period of the last cycle . On the other hand, apparent consumption is 200.000 bags above the historical average.

“In other destinations, Brazil is also occupying a greater market share, filling a gap left by other countries. Similar to the situation observed in the European Union, the United States reported a lower share of Robusta from traditional origins (Vietnam, Indonesia, India) and a lower share from Central America and Mexico, while origins from South America remained stable in the accumulated ", highlights. 

According to Natália, “Brazil also increased its participation in the United Kingdom: 63% of all imports in the 23/24 cycle so far, against 26% in 22/23! Imports from Vietnam, Indonesia and India decreased from 34% to 15%.”

China saw a similar trend: Brazil represents 52% of all imports in 23/24, along with other South American origins (24% versus 14%), while imports from traditional Robusta origins decreased from 22% to 11% this cycle.

In contrast, Japan saw a decrease mainly in offers from Colombia and Peru (the opposite of the trend seen in the EU). Brazil occupies 40% (compared to 37% in the last cycle), while Robusta origins occupy 34% (compared to 33%).

In summary, the increase in European Coffee Federation (ECF) stocks shows that seasonality is manifesting itself, as well as changes in trade flow compared to the second half of 2023. As stock levels in destinations are still far from average , they remain a bullish point in the short to medium term. Once destinations begin to reduce benchmark rates, and given spreads are tighter, these same stocks should become bearish fundamentals in the medium to long term.

It is also important to note that Brazil surpassed previous export records in 2024, taking a greater share of destination imports overall – with the most notable changes occurring in the European Union, United Kingdom and China.