hEDGEpoint: What does the reduction in coffee stocks in Japan mean for the market?

Cumulative imports from Japan through June reached 4.19 million bags, marking a sharp year-on-year decline of -23%

Last week, data on coffee levels available in Japan and the European Union were announced. In the Japanese market, the 1st sem. 2023 has witnessed a remarkable change. From January to April, Japan experienced a significant reduction in coffee stocks, mainly attributed to a drop in imports. Japan, as Asia's top coffee importer, reported historically low import numbers for these months, contrary to the usual seasonal increase.

Until the end of July, coffee stocks stood at 2.44M scs, reflecting an 18% variation in relation to the average. However, there was a slight month-on-month increase of 3.2%, defying the expected seasonal decline of -0.3%.

In June, imports reached 526 thousand scs, marking a 10% year-on-year decline, along with a month-on-month decrease of -0.4%. “This unusual trend in Japan's coffee market has drawn attention and may indicate evolving consumer preferences amid supply chain disruptions,” notes Natália Gandolphi, hEDGEpoint Global Markets Coffee Analyst.

In the 2022-2023 cycle, Japan's cumulative imports through June reached 4.19 million bags, marking a sharp year-on-year decline of -23%. “This sudden reduction of -19% in relation to the estimated 5.14 million bags highlights an unexpected decrease in demand”, she says.

According to the analyst, although Japan's demographic trends suggested lower growth in demand, actual performance has been worse than predicted.

The apparent consumption estimate for the period from October 2022 to June 2023 is 4.72 million bags, with a year-on-year variation of -4.3% and a slight difference of -4.4% in relation to estimated 4.94 million bags.

“These numbers highlight the challenges faced in the Japanese coffee market, with a year-on-year variation of -0.7% in total consumption from 21/22 to 22/23”, he concludes.

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Source: hEDGEpoint | Via Revista Cafeicultura