Not "cooling down", coffee export prices have increased for the 5th consecutive session

Statistics from the Vietnam Commodity Exchange (MXV) show that at the end of the trading day on December 28, Arabica coffee prices increased slightly by 0.13%, marking the fifth consecutive increase for this commodity. Robusta prices continued to recover strongly with an increase of 2.34% compared to the reference price. Concerns about supply shortages in the context of low inventories continued to push prices up.

Chưa “hạ nhiệt”, giá xuất khẩu cà phê có phiên tăng thứ 5 liên tiếp

Prices of two types of coffee increased

Standard Arabica inventories on the Intercontinental Commodity Exchange (ICE-US) closed on December 27 down nearly 1,000 60kg bags, to 246,941 bags, still around the lowest level in more than 24 years. Previously, the US Department of Agriculture (USDA) in its global coffee market report for the 2023/24 crop year forecast world coffee inventories at only 26.5 million bags, the lowest in 12 years. At the same time, Robusta inventories stored at the ICE-EU closed on December 27 at 34,050 tons, down 960 tons from the previous session and continuing to head towards the historic low at the end of August.

Furthermore, attacks on the Red Sea have made shipping difficult, which has also contributed to the price increase.

In the domestic market, recorded this morning (December 29), the price of green coffee beans in the Central Highlands and the Southern provinces fluctuated between 69,100 - 69,900 VND/kg, an increase of 1,700 VND/kg compared to yesterday.

Coffee futures continued to rally after the USDA’s semi-annual report cut its forecast for global coffee production in 2023/24 to 171.4 million bags from its previous estimate of 174.3 million bags. Of particular concern is the reduction in global Robusta production in 2023/24 to 74.1 million bags from its previous estimate of 78 million bags, and global coffee inventories in 2023/24 to 26.5 million bags from its June estimate of 31.8 million bags.

Expectations of higher Brazilian coffee exports in November put downward pressure on prices early in the session, and forecasts of showers across major growing regions in southern Brazil in the first week of 2024. However, prices later started to rise on comments that rains could cover the growing regions.

High coffee export prices benefit Vietnamese farmers

According to the Vietnam Coffee and Cocoa Association (Vicofa), domestic coffee prices are expected to remain high next year due to a severe shortage in supply in the 2022/2023 coffee crop. The association estimates that there is a shortage of about 1.5 - 2.5 million bags of coffee under contract and needs to be met from the current coffee harvest, while farmers are still reluctant to sell coffee at current prices, pushing prices further up on the London floor.

According to statistics from Vicofa, Europe currently consumes about 40-50% of Vietnam's coffee exports and this region still has good demand. Therefore, with the current large shortage of supply, coffee prices are forecast to continue to be high in 2024.

According to a report by the USDA's Foreign Agricultural Service (FAS), Vietnam's 2023/24 coffee crop year production is estimated to drop to 27.8 million bags from an estimated 31.3 million bags in May 2023 due to unfavorable weather. The estimated carryover inventory has dropped to only 390,000 bags instead of 2.76 million bags as previously estimated.

Many leading experts predict that Vietnam's coffee export prices are expected to remain high, and may even reach a new peak in 2024 due to concerns about global coffee supply. Exports are forecast to earn from 5 billion USD in 2024.

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