Dollar exchange rate and drought in Brazil: What kind of coffee year awaits Kazakhstan?
Since the beginning of the year, the global price of Arabica coffee has increased by more than 80%. In Kazakhstan, this beverage is quite popular, but since coffee is not produced domestically, its prices depend entirely on imports. In this analytical report, a Kazinform News Agency correspondent will examine how coffee prices are expected to change in the global market and the potential impact on Kazakhstani consumers in 2025.
How drought in Brazil impacts the market?
Coffee production occupies a significant share of the global economy. With over 100 varieties, the main ones cultivated globally are Arabica, Robusta, and Liberica. However, international trade focuses on two types: Arabica (Coffea Arabica) and Robusta (Coffea canephora), with Arabica accounting for 70% of production and Robusta for 30%.
Although around 40 countries grow coffee, Brazil supplies one-third of global demand. This makes the Brazilian drought a major pressure on this niche market. Since the beginning of 2024, Arabica prices have surged by approximately 70% in the U.S., while Robusta prices have risen by 85% in London. Arabica futures in early December increased by more than 3% in New York trading, reaching $3.22 per pound—the highest level since 1977, according to analysts from Trading Economics.
Additionally, the U.S. Department of Agriculture (USDA) forecasts that Brazil’s coffee harvest in the 2024-2025 agricultural year will amount to 66.4 million bags (each weighing 60 kilograms), down from the previously expected 69.9 million bags. Coffee stocks in Brazil are now estimated at 1.2 million bags by the end of the agricultural year, 26% lower than the previous season.
“Overall coffee production in Brazil for the 2024/25 marketing year is projected at 66.4 million bags, a 0.2% increase over the previous season. This minor growth follows a period of adverse weather conditions in key producing regions, leading to initial lower estimates. As a result, Robusta production declined, slightly offset by an increase in Arabica, which constitutes the majority of Brazil’s coffee output. Meanwhile, coffee exports in 2024 reached record highs as Brazil expanded its global market share, filling gaps left by other major producers like Vietnam and Indonesia,” the ministry’s statement reads.
According to Brazil’s Cemaden meteorological service, the current season is the driest since 1981. Meanwhile, ICAFE research institute reports that heavy rains in Costa Rica, another coffee-producing country, led to a state of emergency, destroying about 15% of its annual coffee harvest.
Bloomberg highlights that coffee traders lost $7 billion in margin calls during the volatile month of November. Furthermore, Trading Economics forecasts a 10.4% reduction in Arabica production in Brazil to 40 million bags next year, partially offset by higher Robusta output. This will reduce Brazil’s total coffee yield by 0.5%. At the same time, Colombia’s National Federation of Coffee Growers reported a 37% increase in Arabica production in November 2024, reaching 1.76 million 60-kilogram bags of washed Arabica compared to the same month last year.
Who supplies coffee to Kazakhstan?
Kazakhstan’s coffee industry began to develop in the late 2000s. Before then, coffee was mostly served in restaurants and hotels, with little demand among the general population. Starting in the 2010s, global coffee chain franchises gradually opened in the country.
According to Kazakhstan’s Bureau of National Statistics, the country’s main coffee suppliers include Brazil, Russia, Italy, Colombia, several African countries, the Netherlands, and others. The import of both raw and roasted coffee beans has been growing yearly. In 2022, Kazakhstan imported 2,928 tons of coffee, which increased to 3,100 tons in 2023. Brazil remained the leading supplier, providing 823.1 tons, followed by Russia, a major coffee supplier in the CIS. The statistics encompass all types of coffee, including green and roasted, caffeinated and decaffeinated, as well as coffee husks, shells, and substitutes.
The coffee-to-go trend
Ayat Azimov, co-founder of a coffee chain in Kazakhstan, shared his insights on witnessing the growth of the coffee industry in the country. According to him, supply came first, followed by demand. He observed that over the past eight years, the import of green coffee beans (raw material) in Kazakhstan has increased 20-fold, with numbers continuing to rise.
“The coffee sector is relatively new, but consumption is growing every year, reaching new age categories. When we started our coffee business in 2016, our target audience was between 17 and 35 years old. Now, it ranges from 15 to 60 years old. The age range is expanding, though a widespread coffee culture has yet to develop. However, the trend suggests that we will eventually become a coffee-drinking nation, perhaps in 10 or 20 years,” commented Ayat Azimov.
However, according to experts, the majority of Kazakhstani citizens prefer tea over coffee. Statistics show that each Kazakhstani consumes 410 grams of coffee annually. By comparison, Finland holds the top spot for coffee consumption, with an average of 12 kg per person per year.
Additionally, Kazakhstan’s coffee culture began to actively develop with the emergence of coffee roasting workshops, which followed the establishment of private coffee shops by local entrepreneurs. Some coffee shop owners import green coffee beans and roast them locally in Kazakhstan.
According to the entrepreneur, most people in the country prefer Arabica coffee, as it is milder, especially when paired with milk. However, the love for coffee as a trend has developed gradually.
“Coffee existed before we entered the market in Kazakhstan... But there were no coffee shops in the coffee-to-go format as there are now. Coffee was only offered in restaurants and hotels. At the time, there wasn’t a strong attachment to coffee because it was associated with something bitter. Historically, the average Kazakhstani and Central Asian resident is accustomed to drinking tea with milk. But when we offered the market medium-roast mild coffee, tailored to local tastes, people started to love coffee as a beverage. We provided an alternative to tea, and people began to adapt,” explained the entrepreneur.
There are no precise statistics on coffee varieties consumed in Kazakhstan. However, as globally, Arabica and Robusta are widely popular in the country. Many also blend different varieties to reduce product costs. For example, Robusta is typically cheaper than Arabica.
“Initially, Robusta entered the market at a lower price point, and many mixed it to save costs. Hypothetically, if Brazilian Arabica costs $10 per kilogram on the market and is mixed with Ugandan Robusta, which costs $6 per kilogram, the coffee’s cost would drop from $10 to $8.4,” noted Ayat Azimov.
How coffee prices will change in Kazakhstan
The price of a cup of coffee (350 ml) in Kazakhstan ranges from 800 to 1,200 tenge. The price usually depends on the region, establishment, and other factors. According to experts, the cost of 1 kg of coffee beans equals 10,000 tenge. This makes the base cost of coffee around 180 tenge. Milk, however, is more expensive at 200 tenge (for 300 ml). Together, these account for 380 tenge. In addition, there are expenses for rent, barista services, utilities, taxes, and the cost of cups, logistics, and the company’s net profit. As a result, the estimated price of a cappuccino is around 1,000 tenge.
However, if the cost of coffee beans increases, the price of coffee will also rise. Experts and coffee business owners predict that the price could increase by 30%.
“Coffee that cost us $5 per kilogram a year ago now costs about $10. We’re in a situation where coffee is becoming more expensive, and the dollar is rising. On one hand, there’s drought in Brazil and weather issues in Vietnam. These conditions led to a poor harvest, creating a deficit and driving up prices. Logistics chains have also been disrupted—there’s a container shortage in Brazil, causing coffee to stagnate. All these factors have driven coffee prices up because market traders set the rates. This affects the cost price, and coffee prices will continue to rise. For a cup of coffee, prices are expected to increase by 20-30%,” concluded Ayat Azimov.
What about neighboring countries?
Russian experts forecast a 25% increase in coffee prices by 2025. Anton Trenin, an expert in corporate ratings at ACRA, notes that the situation is unlikely to improve in 2025, and coffee prices could rise by 20-25%.
For Robusta, weather problems in Vietnam, its largest producer, are expected to reduce harvests due to typhoons and rare rains. According to experts, Robusta, previously used to lower the cost of coffee blends, is now nearly as expensive as Arabica.
The Russian coffee market is entirely dependent on foreign supplies, and therefore, on the exchange rate of the ruble to the dollar. This introduces negative factors affecting coffee prices in addition to global trends. As a result, Russian consumers will face a significant increase in coffee prices. Some Kazakhstani consumers who import coffee from Russia will also be affected.
In Kyrgyzstan, coffee demand is also growing. Coffee imports in 2023 increased 2.2 times. According to the National Statistics Committee of Kyrgyzstan, coffee imports from January to September 2024 totaled 263.3 tons worth $2.165 million. Like in Kazakhstan, Russia is the primary coffee supplier to Kyrgyzstan, exporting 167.5 tons worth $1.372 million. Kazakhstan also exported 22.8 tons to Kyrgyzstan worth $244.8 thousand. This shows that the Central Asian coffee market is entirely import-dependent, which means a universal rise in prices is expected.
As a result, the prices of Arabica, which serves as the global benchmark for coffee futures contracts, will steadily rise. Moreover, Arabica accounts for 70% of global coffee production and is widely consumed in Kazakhstan. This means an inevitable increase in coffee prices awaits both entrepreneurs and the growing number of enthusiasts of this invigorating and aromatic beverage.
