Supply down, demand up, coffee prices will remain high

Coffee export prices hit record high

According to the Import-Export Department (Ministry of Industry and Trade), in August 2024, Robusta and Arabica coffee prices on trading floors increased sharply, continuously recording record highs in many years due to unfavorable weather in Brazil and Vietnam, affecting global supply.

Coffee output in the 2024-2025 crop year is forecast to decrease by 5% to 15% (ANanh: NH)

In addition, all three important speculative components in the market (Non-Commercial Hedge Funds, Fund Management Companies and Market Index Funds) increased their net buying positions, causing prices to increase sharply. Meanwhile, the amount of classified Arabica coffee held in the New York market as of August 27, 2024 decreased by 420 bags, down to 843,725 bags.

In the domestic market, it is estimated that in August 2024, Vietnam exported 80,000 tons of coffee, worth 423 million USD, up 3.9% in volume and 11.1% in value compared to July 2024; compared to August 2023, it decreased by 5.4% in volume but increased by 64% in value. In the first 8 months of 2024, Vietnam exported 1.06 million tons of coffee, worth 4.03 billion USD, down 11.9% in volume but up 36.1% in value compared to the same period in 2023. The amount of coffee exported decreased compared to the same period last year due to low supply.

It is estimated that in August 2024, the average export price of Vietnam's coffee will reach 5,293 USD/ton, up 6.9% compared to July 2024 and up 73.4% compared to August 2023. In the first 8 months of 2024, the average export price of Vietnam's coffee is estimated to reach 3,805 USD/ton, up 54.5% over the same period last year.

Mr. Nguyen Nam Hai - Chairman of the Vietnam Coffee and Cocoa Association (Vicofa) - informed that since Vietnam started exporting coffee, this is the first time in history that the price of this type of bean has exceeded the 5,000 USD/ton mark. However, Vietnam's coffee inventory for export in September is not much, the supply has run out.

The coffee harvest will begin next October, peaking in November and December. However, our country's coffee output in the 2024-2025 crop year is estimated to decrease by about 10% compared to the previous crop (the output in the 2023-2024 crop year is estimated at about 1.5 million tons).

Talking to reporters of the Industry and Trade Newspaper, Mr. Le Duc Huy - General Director of Simexco DakLak - informed that currently, it is estimated that 100% of the output will continue to decrease, and there will be no more inventory to transfer from this year to next year, so the amount of available goods to the market will continue to be limited. From now until the end of this crop, goods will be scarce. In the new crop, there will be a number of roasters who need to buy Robusta coffee, leading to continued market difficulties. "This year, in May, there was a shortage of goods, and next year, it is expected that the shortage will occur earlier, possibly from March," Mr. Le Duc Huy shared.

Coffee prices are expected to remain high.

According to Mr. Le Duc Huy, Brazil is suffering from frost, which affects coffee production. At the same time, he said that it is difficult to make any comments on prices because the current market is not only in a picture of supply and demand, but also financial issues, war, and crisis. All are possible. However, if it is purely about supply and demand, prices may not be able to decrease and will remain high.

Similarly, after a survey of coffee growing areas in Dak Lak, the director of a business in this industry also predicted that the coffee output of the next crop could decrease by 5-10%. Because some coffee growing areas showed that the encroachment of other crops such as durian trees has reduced the coffee area. In addition, the drought in the middle of this year also affected the output of this crop in many provinces in the Central Highlands.

Regarding the export price of coffee, Mr. Nguyen Nam Hai commented that although the coffee output will be abundant during the harvest season, the price of coffee can still be stable at a high level, which is beneficial for farmers. In the coming time, it will be difficult for this type of bean to decrease sharply due to the impact of climate change, the El Nino phenomenon causing drought throughout the coffee growing regions of the world leading to a decrease in supply. Geopolitical conflicts in the world, tensions in the Red Sea have caused shipping costs and many other costs to increase. Along with that, many financial speculators in the world choose coffee (after oil and gold) to speculate. These are major factors that push up global coffee prices and keep them at a high level, including coffee prices in Vietnam.

The Import-Export Department also forecasts that coffee prices will remain high next month due to reduced supply and increased demand. Vietnam's 2024/25 coffee output is expected to fall sharply to a 13-year low. Meanwhile, the mainstream coffee consumer market in the Northern Hemisphere is gradually returning after the summer break, which will help boost some physical coffee trading activities in the coming months ahead of the winter coffee roasting season in Europe and the United States.

Source: https://congthuong.vn/cung-giam-cau-tang-gia-ca-phe-se-van-duy-tri-o-muc-cao-345807.html