Vietnam’s Coffee Supply Plummets After Drought, Prices Hit 45-Year High
At a glance: Helios helped customers spot the Vietnamese coffee beans supply shortage three months before the media reported it and prices skyrocketed, showcasing the ability to predict supply chain disruptions.
What happened?
Vietnam's April 2024 drought caused lower yields, straining already tight stockpiles and driving coffee prices to a 45-year high. Due to the intense heat that struck the Central Highlands coffee region between March and early May, the Mercantile Exchange of Vietnam (MXV) recorded a 10–16% decrease in output. The International Coffee Organization reported a nearly 20% price increase in Q2/Q3 2024, with Arabica futures exceeding $2.70 per pound, up from $1.49 earlier this year. Robusta bean prices also surged, more than doubling in the past year to exceed $2,000 per metric ton. The coffee market is rapidly escalating!
How Helios Helps
Figure #1 below represents a sharp increase in coffee prices in 2024, peaking in April. The Helios platform detected signals from drought-affected coffee regions in Vietnam, predicting the price surge ahead of media reports. By analyzing weather data and market trends, Helios highlighted the drought's impact on coffee production, enabling traders and businesses to prepare for the supply shortage before it became widely recognized, thus providing users an advantage in the volatile market.
Figure #2
Vietnam, which produces 17% of the world's coffee, saw its Weighted Avg % Risk skyrocket from 23% to 63% in seven days. This sharp rise was caused by the extreme heat impacting the growing season across the country, particularly in the highland region, as shown below.
Figure #3
Kon Tum, which produces 10% of Vietnam’s coffee, located in the Central Highlands, faced excessive heat during Spring 2024. In April 2024, Kon Tum saw an average of 60% of risk days when the temperature was too high, making it unsuitable for growing coffee.
