World coffee prices reversed compared to yesterday's session, robusta decreased while arabica had a slight increase, after a sharp decrease at the beginning of the week.
Funds and speculators remain cautious as Brazil begins to show signs of increasing the amount of Conilon robusta delivered to auction floors. Meanwhile, abundant arabica supplies from this leading producer - Brazil enters the peak of the new crop harvest this year with many forecasts of increased output.
It is known that Brazilian farmers have sold about 32% of the total expected output of the current coffee crop year 2023/2024, but still lower than the average of previous crops. Meanwhile, the forecast of El Nino appearing in the second quarter of 2023 will affect coffee production in Vietnam and Indonesia. This leads to a threatened supply, along with low supply in many of the world's leading coffee producing countries, coffee prices will continue to improve.
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| Domestic coffee prices today, July 19, decreased by 100 to 200 VND/kg in some key purchasing localities. (Source: Favpng) |
In early July 2023, Robusta and Arabica coffee prices tended to decrease due to new crop sales pressure, despite reports of low inventories. The ICE - London inventory report, as of July 10, decreased by another 3,020 tons, down to 56,860 tons - a level lower than 1 year. However, on July 17, the inventory was offset by 220 tons of new goods, up to 54,540 tons (about 909,000 bags, 60kg bags), recording the first increase in inventory since the end of March 2023.
At the end of the trading session on July 18, the price of robusta coffee on the ICE Futures Europe London exchange decreased. The price of robusta coffee futures for September 2023 delivery decreased by 20 USD, trading at 2,532 USD/ton. The price of November delivery decreased by 13 USD, trading at 23,093 USD/ton. Trading volume was low.
Arabica coffee prices on the ICE Futures US New York exchange, the September 2023 delivery period increased slightly by 0.5 cents, trading at 156.3 cents/lb. Meanwhile, the December 2023 delivery period increased by 0.8 cents, trading at 156.45 cents/lb. Trading volume increased.
In the domestic market, coffee purchasing prices decreased by 100 - 200 VND/kg, the highest transaction price was 65,600 VND/kg, recorded in Dak Nong province.
Domestic coffee prices today, July 19, decreased by 100 to 200 VND/kg in some key purchasing localities.
Unit: VND/kg. (Source: Giacaphe.com) |
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.
According to USDA's assessment, it will not be until the 2023-2024 crop year that Vietnam's coffee output can recover 5% to 31.3 million bags.
The Vietnam Coffee and Cocoa Association (VICOFA) previously estimated that Vietnam's robusta coffee output in the 2022-2023 crop year would decrease by 10-15% compared to the previous crop year to about 1.5 million tons due to the impact of unfavorable weather and the wave of crop conversion to fruit trees.
With production down 10-15%, exporters are concerned that there will not be enough coffee to deliver in the second half of the year. As of the end of June, we estimate that inventories were only around 100,000 tonnes, which is not enough to meet export demand in the remaining three months of the crop year.
According to Bloomberg, the US Climate Prediction Center has confirmed that the El Niño weather phenomenon (hot and dry weather) has returned, with the forecast strength being moderate to strong. This threatens the supply of major coffee growing regions such as Vietnam and Indonesia. The El Niño weather phenomenon is expected to develop globally in the second half of this year, which also poses a greater risk to robusta than arabica. This weather phenomenon will disrupt rainfall and temperature patterns, which could further tighten supply and increase robusta prices.
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