According to the Vietnam Commodity Exchange (MXV), at the end of the trading session on November 29, Arabica prices increased sharply by 2.4% compared to the reference price, while Robusta prices decreased slightly by 0.27%. The expectation of price increases in the market temporarily overshadowed positive signals about supply, supporting the price increase.
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| Arabica coffee prices maintain upward momentum |
A report from the Commodity Futures Trading Commission (CFTC) showed that coffee investors continued to increase their net long position by 1,293 contracts, to 12,499 contracts in the week ending November 21. This shows that speculators are still betting heavily on the possibility of prices rising.
At the same time, the total amount of coffee stored at ports in the European region as of the end of October 2023 was more than 506,400 tons (equivalent to 8.4 million 60kg bags), the lowest monthly level recorded since 2017. This could boost imports in the meantime to offset the shortage of stored coffee, contributing to the upward momentum of prices.
Moreover, the weaker US dollar amid a stronger Brazilian Real sent the USD/BRL exchange rate down 0.53% yesterday. The lower exchange rate differential limits Brazilian farmers’ demand for coffee as they earn less foreign currency.
Meanwhile, Robusta prices are still quite volatile as the market waits for clearer signals about coffee supply in Vietnam at the present time.
In the domestic market, this morning (November 29), the price of green coffee beans in the Central Highlands and the Southern provinces also recovered by 200 VND/kg. Accordingly, domestic coffee is currently purchased at around 57,800 - 58,900 VND/kg.
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| Although Vietnam is entering the new harvest season of 2023 - 2024, the supply shortage is still occurring, helping to increase export prices. |
Vietnam's coffee export volume has been decreasing in the past two months. The main reason is that coffee inventories have now dropped to a record low. However, although Vietnam is entering the new harvest season of 2023 - 2024, the supply shortage is still occurring, helping to increase export prices.
According to Mr. Do Ha Nam, Vice President of the Vietnam Coffee and Cocoa Association (Vicofa), up to this point, coffee output has decreased four times, but prices have increased by 3.4%. At one point, coffee prices increased to nearly VND70,000/kg and it is predicted that prices may increase further in the next crop due to a shortage of supply.
Mr. Do Ha Nam also assessed that coffee prices would increase even more if farmers paid more attention to the quality of raw coffee beans. For coffee beans to have the best coffee quality, coffee must be picked when ripe. When coffee cherries are ripe, their weight will increase by 10%. This will help increase coffee output and improve coffee quality during processing.
According to the Import-Export Department (Ministry of Industry and Trade), in mid-November 2023, Robusta coffee prices in the domestic market increased following world prices. Currently, the average coffee price in the Central Highlands provinces is about 58,200 VND/kg.
Coffee industry experts say that prices of this commodity continue to increase due to concerns about supply shortages and reports of continued declines in global inventories. Notably, Robusta coffee prices (a type of coffee commonly grown in our country) are forecast to increase due to scarce supply while demand increases at the end of the year.
Last week, the US Department of Agriculture also released a series of mid-year reports for leading coffee producing countries. This unit has lowered the forecast of coffee supply of most of the world's leading coffee supplying countries such as Brazil, Vietnam and Indonesia due to unfavorable weather conditions for coffee to grow well. The shortage of supply is an opportunity for Vietnam's coffee exports to continue to increase in value.
According to statistics up to mid-November this year, Vietnam exported more than 1.33 million tons of coffee, worth 3.4 billion USD. However, the export figure has gradually decreased in the last two months, because the inventory of Vietnamese coffee has decreased to the lowest level ever.
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