World coffee prices all decreased at the end of the week, after strong fluctuations during the week. Robusta coffee prices traded on the London Stock Exchange last week set a new 15-year technical high…
The world's two largest robusta coffee producers, Vietnam and Brazil, could suffer yield losses if El Nino develops strongly, analysts and weather experts say.
As of the end of May, certified robusta coffee stocks on the London exchange were 1.4 million bags (60kg), up 5.9% from the previous month. In contrast, arabica stocks on the New York exchange fell 11.2% to 0.66 million bags.
At the end of this weekend's trading session, robusta coffee prices on the ICE Futures Europe London exchange turned slightly down. Robusta coffee futures for July 2023 delivery decreased by 8 USD, trading at 2,796 USD/ton. September delivery futures decreased by 10 USD, trading at 2,747 USD/ton. Average trading volume.
Arabica coffee prices on the ICE Futures US New York exchange decreased. The July 2023 delivery contract decreased by 2.1 cents, trading at 184.90 cents/lb. Meanwhile, the September 2023 delivery contract decreased by 2.2 cents, to 180.75 cents/lb. Trading volume was high on average.
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| Domestic coffee prices decreased by 100-200 VND/kg in some key purchasing localities, during the weekend session (June 17). (Source: Freepik) |
On Monday, June 19, the New York market was closed all day for the Abolition Day holiday in the United States; the London market was open as usual.
Domestic coffee prices decreased by 100-200 VND/kg in some key purchasing localities, during the weekend session (June 17).
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, labor and fertilizer costs and farmers' tendency to switch to more profitable crops.
According to USDA's assessment, it will not be until the 2023-2024 crop year that Vietnam's coffee output can recover by 5% to 31.3 million bags. Meanwhile, supply from Brazil, the second largest producer of robusta coffee, is significantly lower with export volume reaching 0.4 million bags in the first 4 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 production in the 2023-2024 crop year (July 2023 to June 2024) to reach only 21.7 million bags, down 5% compared to the 2022-2023 crop year. The reason is due to lower yields and poor weather conditions due to lower rainfall in the early stages of the crop cycle.
The Indonesian Coffee Producers and Exporters Association (AEKI) expects the country’s coffee output to fall by up to 20% in 2023 from the previous season to 9.6 million bags due to heavy rains in major growing areas. Indonesia is currently the world’s third-largest producer of robusta coffee.
In addition, the El Nino weather phenomenon, which is expected to develop globally in the second half of this year, also poses a greater risk to robusta than arabica. This weather phenomenon will disrupt rainfall and temperature patterns, which could further tighten supplies and increase robusta prices.
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