Coffee price forecast June 16, 2024: Continuing the shocking decline?

Coffee prices on June 16, 2024 in the domestic market are forecast to continue to decline. According to expert Nguyen Quang Binh, strong selling pressure on the Robusta floor at the end of the session pushed both floors down. Coffee prices are also under pressure because the harvest in Brazil is progressing smoothly and faster.

Early morning of June 15 in the US market, the US Dollar Index (DXY) measuring the fluctuations of the greenback against 6 key currencies (EUR, JPY, GBP, CAD, SEK, CHF) increased by 0.32%, reaching 105.52.

The dollar rose to a near seven-week high in the previous session as traders bet the Federal Reserve would cut interest rates only once this year. A series of negative news pushed coffee prices down sharply at the end of the week.

However, Vietnam's coffee exports have decreased continuously for the past 4 months, a sign that domestic inventories are not much left. In the first 5 months of the year, coffee exports reached 817,154 tons with a revenue of more than 2.8 billion USD, compared to the same period in 2023, down 5.8% in volume but up 40.9% in value thanks to high prices.

At the end of the first 8 months of the 2023-2024 crop year (October 2023 to May 2024), Vietnam exported nearly 1.2 million tons of coffee, equivalent to 80% of the current crop year's output and down 7% compared to the same period last crop year.

The shift from the current neutral phase between La Nina and El Nino weather patterns is expected to continue into the 2024-2025 northern hemisphere winter, with an 85% chance of occurring during November through January, the National Weather Service's Climate Prediction Center (CPC) said in its monthly forecast.

The cycle between El Nino, La Nina and neutral phases typically lasts two to seven years and can cause wildfires, tropical storms, floods and prolonged droughts, affecting farmers around the world.

Meanwhile, domestic coffee prices today increased slightly by VND200/kg, ranging from VND120,600-121,800/kg. Currently, the average purchase price in the Central Highlands provinces is VND121,700/kg, the highest purchase price in Dak Nong province is VND121,800/kg.

Specifically, the coffee purchase price in Gia Lai province (Chu Prong) is 121,600 VND, in Pleiku and La Grai the price is 121,500 VND/kg. In Kon Tum province, the price is 121,600 VND/kg; In Dak Nong province, coffee is purchased at the highest price of 121,800 VND/kg.

The price of green coffee beans (coffee beans, fresh coffee beans) in Lam Dong province in districts such as Bao Loc, Di Linh, Lam Ha, coffee is purchased at 120,600 VND/kg.

Coffee prices today (June 15) in Dak Lak province; in Cu M'gar district, coffee is purchased at about 121,600 VND/kg, and in Ea H'leo district, Buon Ho town, it is purchased at the same price of 121,500 VND/kg.

According to experts, strong selling pressure on the Robusta floor at the end of the session pushed down the prices of both floors. The price of this agricultural product is also under pressure because the harvest in Brazil is progressing smoothly and faster.

In addition, the US dollar has risen to a nearly 7-week high, further reducing the attractiveness of coffee. As of the survey time, the DXY index, which measures the greenback's movements against 6 major currencies (EUR, JPY, GBP, CAD, SEK, CHF), has increased to 105.52.

The dollar held firm as traders bet the Fed would cut interest rates only once this year.

In contrast to the upward trend of domestic coffee prices, today's online coffee prices of three exchanges in London, New York and Brazil fell sharply.

London Robusta coffee price (Photo: Screenshot giacaphe.com)

Specifically, the price of Robusta coffee futures contract for July 2024 delivery on the London floor was at 4,115 USD/ton, down 106 USD compared to the beginning of the trading session. The delivery term for September 2024 was 4,009 USD/ton, down 84 USD; the delivery term for November 2024 was 3,867 USD/ton, down 67 USD and the delivery term for January 2025 was 3,713 USD/ton, down 47 USD.

New York Arabica coffee price (Photo: Screenshot giacaphe.com)

Similarly, the price of Arabica coffee on the New York floor today at 20:30 on June 15, 2024 decreased in all terms, fluctuating at 221.95 - 224.15 cents/lb.

Specifically, the July 2024 delivery period is 224.15 cents/lb; down 1.90 cents/lb compared to the beginning of the session. The September 2024 delivery period is 224.40 cents/lb, down 1.85 cents/lb; the December 2024 delivery period is 223.20 cents/lb, down 1.80 cents/lb and the March 2025 delivery period is 221.95 cents/lb, down 1.60 cents/lb.

Robusta coffee traded on the ICE Futures Europe (London exchange) opens at 16:00 and closes at 00:30 (next day), Vietnam time.

Arabica coffee on the ICE Futures US (New York floor) opens at 16:15 and closes at 01:30 (next day), Vietnam time.

For Arabica coffee traded on the B3 Brazil exchange, it will be open from 19:00 - 02:35 (next day), Vietnam time.

The Import-Export Department (Ministry of Industry and Trade) recently predicted that the price of this agricultural product will increase again, mainly due to investors' increasing concerns about the supply prospects from Vietnam.

Hedge funds have increased their net long positions in anticipation of a further shortage of Robusta from Vietnam in the coming period. Vietnam’s Robusta output in the 2024/25 crop year is estimated at 24 million bags - the lowest in 13 years, due to unfavorable weather, according to Volcafe, a trading house.

According to a report by the US Department of Agriculture's Foreign Affairs Office (USDA Post), Vietnam's coffee output in the 2024/25 crop year is forecast to be around 29 million bags (60kg/bag), a slight decrease compared to the estimated 29.1 million bags in the 2023-2024 crop year.

Of which, Robusta output reached 27.85 million bags, lower than the 28 million bags of the previous crop year. Meanwhile, Arabica output will increase slightly to 1.15 million bags.

Vietnam’s 2023/24 production estimate has been revised up 6% from the previous forecast to 29.1 million bags. Higher coffee prices in 2022/24 have prompted farmers to increase investment in production to reduce crop losses and other inputs.

Instead of switching completely to other crops, coffee farmers are now applying intercropping methods to diversify and increase revenue.

Information for reference only. Prices may vary by location.

Source: https://congthuong.vn/du-bao-gia-ca-phe-ngay-1662024-tiep-da-giam-soc-326389.html