World coffee prices last week were supported by monetary factors. The recovery of USDX after the decision to temporarily suspend interest rate hikes at the June monetary policy meeting of the US Federal Reserve (Fed), in addition to the adjustment of basic interest rates by the European Central Bank (ECB) and the People's Bank of China (PBoC), stimulated funds and speculators to return to commodity exchanges to increase purchases, pushing most markets up.
However, in July, when Robusta prices increased by 68 USD in 1 week, Arabica prices decreased by 5.75 cents. Arabica coffee prices in New York decreased due to the liquidation of net positions before the expiration of July futures options and selling pressure from the new crop being harvested in Brazil - the world's largest coffee producer and exporter.
Robusta coffee prices in London have set a new 15-year high as the consumer market remains concerned about a short-term supply shortage, at least, after the General Department of Vietnam Customs reported that robusta coffee exports in May fell 8.52% compared to the previous month, bringing exports for the first five months of this year down 3.89% compared to the same period last year. Meanwhile, as of June 15, Robusta coffee inventories certified and monitored by ICE - London decreased by another 2,330 tons, or 2.97% compared to a week earlier, to a registered level of 76,240 tons (equivalent to 1,270,667 bags, 60 kg bags), marking the fifth consecutive week of decline without any recorded additions.
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| Domestic coffee prices today, June 20, increased by 500 VND/kg in some key purchasing localities. (Source: Kitco) |
At the end of the first trading session of the week (June 19), the price of robusta coffee on the ICE Futures Europe London exchange increased. The price of robusta coffee futures for July 2023 delivery increased by 37 USD, trading at 2,833 USD/ton. The price of September delivery increased by 36 USD, trading at 2,783 USD/ton. Trading volume was low.
The New York arabica coffee futures exchange was closed for a holiday, and the price of arabica coffee on the ICE Futures US New York exchange closed the weekend session for July 2023 delivery down 2.1 cents, trading at 184.90 cents/lb. Meanwhile, the September 2023 delivery contract fell 2.2 cents, to 180.75 cents/lb. Trading volume was high on average.
Domestic coffee prices today, June 20, increased by 500 VND/kg in some key purchasing localities.
Unit: VND/kg. (Source: Giacaphe.com) |
According to experts' estimates, Vietnam's robusta inventory is about 80,000 tons. Accordingly, the output for the 2022-2023 crop year is about 1.5 million tons, plus 100,000 tons of overlap from the previous crop year, for a total supply of 1.6 million tons.
Vietnam exported 1.27 million tons, consumed domestically about 250,000 tons, totaling 1.52 million tons. Thus, the remaining inventory is only about 80,000 tons.
Meanwhile, the average monthly export demand is over 100,000 tons and Vietnam still has 4 months left until the end of the crop year. According to a survey from some businesses, the goods are mainly in the hands of FDI enterprises.
Brazil, the world’s second-largest producer of robusta, began harvesting in May. The recent sharp rise in robusta prices may encourage Brazilians to export more of the bean in the coming months. However, it should be noted that shortages are occurring everywhere.
In addition, the supply of Brazilian robusta coffee cannot meet the demand. Because, unlike Vietnamese products, Brazilian robusta beans can only be used in instant coffee processing and cannot be roasted or blended with Arabica beans.
According to data from the International Coffee Organization (ICO), Brazil's robusta coffee exports in the 7 months of the 2022-2023 crop year (from October 2022 to April 2023) also decreased sharply by 36%. For arabica beans, the downward trend may continue in the coming time due to economic difficulties, reducing demand for coffee with higher prices than robusta beans.
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