Coffee prices lose momentum, exports will slow down for this reason

The US Department of Agriculture (USDA) forecasts Vietnam's coffee output in the 2023-2024 crop year to increase by 1.6 million bags (5%) to 31.3 million bags due to favorable weather.

World coffee prices fell sharply at the end of the week, losing the upward momentum of previous sessions. There was a divestment from coffee to switch to other commodities. In addition, the US dollar rose sharply back to the 101 mark, pushing coffee prices on the New York floor down.

In terms of supply and demand, the market still faces concerns about short- and medium-term supply shortages, along with new crop sales pressure from Brazil. The falling Real has caused a strong sell-off in the domestic market of this country.

Giá cà phê hôm nay 18/9: Cao nhất trong 12 tháng qua,

Domestic coffee prices fell sharply by VND1,500/kg in some key purchasing localities in the trading session this weekend (July 29). (Source: Kitco)

At the end of this week's closing session (July 28), the price of robusta coffee on the ICE Futures Europe London exchange turned sharply down. The price of robusta coffee futures for September 2023 delivery decreased by 85 USD, trading at 2,588 USD/ton. The price of November delivery decreased by 62 USD, trading at 2,437 USD/ton. The average trading volume was high.

Arabica coffee prices on the ICE Futures US New York floor, the September 2023 delivery period decreased by 3.55 cents, trading at 157.9 cents/lb. Meanwhile, the December 2023 delivery period decreased by 3.5 cents, trading at 158.2 cents/lb. Trading volume is high on average.

Domestic coffee prices dropped sharply by VND1,500/kg in some key purchasing localities in this weekend's trading session (July 29).

Average price	Change
USD/VND exchange rate	23,490	+ 25
DAK LAK	66,100	- 1,500
LAM DONG	65,600	- 1,500
GIA LAI	66,000	- 1,500
DAK NONG	66,300	- 1,500

Unit: VND/kg.

(Source: Giacaphe.com)

Despite high expectations, Vietnamese coffee exports in the third quarter are likely to slow down due to depleted supplies.

In the first 9 months of the current crop year, Vietnam exported 1.44 million tons of coffee, while coffee output in the 2022-2023 crop year, according to estimates by the Vietnam Coffee - Cocoa Association (VICOFA), decreased by 10-15% compared to the previous crop year to 1.5-1.6 million tons.

Experts predict that the volume of exports from now until the end of the year may decrease by about 50% compared to the same period due to gradually depleting inventories, mainly in the hands of FDI exporters.

In the long term, for Vietnam to maintain its position as a coffee powerhouse, output needs to be maintained at 1.8 million tons. Over the past three years, the coffee acreage has been continuously reduced due to replacement by other fruit trees. Combined with the negative impacts of climate change, which has caused coffee crop failure, output has decreased even further.

Recently, the US Department of Agriculture (USDA) forecasts that Vietnam's coffee output in the 2023-2024 crop year will increase by 1.6 million bags (5%) to 31.3 million bags due to favorable weather. The expected production area remains unchanged with nearly 95% of total output still being Robusta coffee.

Rainfall is forecast to be 10-20% higher than average, supporting irrigation and coffee growth. Farmers are also gradually replanting coffee trees to increase yields.

However, Vietnam's green coffee exports are expected to fall by 1.5 million bags to 24.5 million bags based on low opening inventories and tighter import regulations from the European Union.

USDA forecasts Vietnam's 2023-2024 ending stocks to increase by 1 million bags compared to the previous crop to 2.7 million bags.

Source