Global coffee prices continued to decline on both the New York and London exchanges as funds and speculators accelerated the trend of liquidating net positions before closing the first 6 months of 2023, due to concerns that the upcoming monetary interest rate will be more volatile when coffee derivatives exchanges are no longer chosen as a shelter for speculative capital. From the peak of 2,900 USD/ton on June 26, coffee fell sharply, returning to a nearly 2-year low.
At the end of last week, which was also the last week of the second quarter of 2023 and the end of the first half of this year, robusta coffee prices had 4 sessions of decline and 1 session of increase at the beginning of the week, the declines were very strong. Robusta coffee futures for September delivery decreased by a total of 185 USD, or 6.91%, to 2,491 USD/ton. Trading volume remained above average.
Arabica coffee prices also had 4 sessions of decline and 1 increase, all of which were very strong. The price of Arabica coffee futures for September delivery decreased by 4.85 cents, or 2.96%, to 159 cents/lb. Trading volume remained very high above average.
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| Domestic coffee prices continued to drop sharply by VND800-900/kg in some key purchasing localities during the trading session last weekend (July 1). (Source: doanhnhan.biz) |
At the end of last week's trading session on the international exchange (June 30), the price of robusta coffee on the ICE Futures Europe London exchange continued to fall sharply. The price of robusta coffee futures for September 2023 delivery decreased by 79 USD, trading at 2,491 USD/ton. The price of November delivery decreased by 83 USD, trading at 2,391 USD/ton. Average trading volume.
The New York Arabica Coffee Futures Exchange continued to decline, with the price of Arabica coffee on the ICE Futures US New York for September 2023 delivery down 2.6 cents, trading at 159.00 cents/lb. Meanwhile, the December 2023 delivery fell 2.15 cents, to 158.10 cents/lb. Trading volume was high on average.
The domestic market has decreased for two consecutive weeks, causing coffee prices to lose 2,800 - 3,000 VND/kg.
Domestic coffee prices continued to drop sharply by 800 - 900 VND/kg in some key purchasing localities during the trading session last weekend (July 1).
Unit: VND/kg. (Source: Giacaphe.com) |
According to observers, the lack of spot buyers in the physical market has negatively affected world coffee prices while selling pressure from the new crop currently being harvested in Brazil has caused buyers to switch to more distant delivery months mainly due to the more significant price differences.
Inventories on both exchanges have started to increase as large funds and speculators show signs of selling off in the coming time.
In its latest report, the International Coffee Organization (ICO) forecast that in the 2022-2023 crop year, global Arabica coffee production is expected to increase by 4.6% to 98.6 million bags. Meanwhile, Robusta production is expected to decrease by 2.1% to 72.7 million bags.
The US Department of Agriculture (USDA) estimates that Vietnam's coffee output in the 2022-23 crop year will decrease by 6% compared to the previous crop year, to 29.7 million bags (60 kg/bag). The world's largest robusta producer will have its lowest harvest in four years due to higher production costs (labor, fertilizer) and farmers tending to switch to more profitable crops such as avocado, durian and passion fruit.
Vietnam’s coffee output could recover by 5% to 31.3 million bags in the 2023-24 crop year, according to USDA. Meanwhile, supplies from Brazil, the second-largest producer of robusta, are significantly lower, with exports reaching 0.4 million bags in the first four months of 2023 compared to nearly 0.5 million bags in the same period in 2022 and 1.24 million bags previously. USDA forecasts Brazil’s robusta coffee output in the 2023-24 crop year (July 2023 to June 2024) to reach only 21.7 million bags, down 5% from the 2022-23 crop year.
This was due to reduced yields and poor weather conditions due to lower rainfall during the early stages of the crop cycle.
In Indonesia, the Indonesian Coffee Producers and Exporters Association (AEKI) expects the country's coffee output to fall by up to 20% in 2023 compared to the previous crop, to 9.6 million bags due to heavy rains in major growing areas.
Indonesia is the world’s third-largest producer of robusta. In addition, the El Nino weather phenomenon, which is expected to develop globally in the second half of this year, poses a greater risk to robusta than arabica. The weather phenomenon disrupts rainfall and temperature patterns, which could further tighten supplies and boost robusta prices. Analysts and weather experts say the world’s two largest robusta producers, Vietnam and Brazil, could suffer yield losses if El Nino develops strongly.
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