Coffee prices hit record high

Coffee prices have been climbing for months, with green beans currently up more than 70% compared to the beginning of the year and up 50% compared to the same period last year.

Recently, the US National Oceanic and Atmospheric Administration (NOAA) announced that "EL Nino has appeared", causing many coffee regions around the world to worry about possible crop failures this year. This has caused coffee prices on exchanges in London and New York to continuously increase. In Vietnam, prices of this commodity have also been climbing for many months.

People harvest coffee in Kon Tum. Photo: Huynh Phuong — People harvest coffee in Kon Tum. Photo: *Huynh Phuong*

In the Central Highlands provinces, last week coffee prices increased by 3,000-5,000 VND per kg compared to the previous week. Currently, domestic coffee bean prices have exceeded 67,000 VND per kg, the highest level ever. In Dak Nong, coffee prices increased to 67,200 VND per kg, while in Lam Dong and Kon Tum, prices are around 64,000-65,000 VND.

Data from the Vietnam Coffee and Cocoa Association (VICOFA) shows that green coffee prices in June increased by more than 70% compared to January and increased by 50% compared to the same period last year.

On the world market, the price of robusta coffee for July delivery on the New York Stock Exchange hit a record of 2,728 USD (equivalent to more than 64 million VND) per ton on June 10, up 46% compared to the beginning of this year and the highest level ever. Over the past 3 days, world coffee prices have turned around and decreased but not significantly.

Mr. Nguyen Van Liem - a local business specializing in purchasing coffee in Lam Dong - said that at this time, coffee in the Central Highlands provinces has not entered the season yet, so the amount sold on the market is scarce, only a small amount is still stored from last year but not significantly.

"The 2022-2023 coffee harvest will take place from October to December, but according to surveys of growers, this year's output has dropped sharply by 20-50% (depending on the household)," said Mr. Liem.

Owning a hectare of coffee in Kon Tum, Ms. Hai said that this year's yield in her garden could decrease by 20% compared to the same period last year due to prolonged heat, which causes poor flowering and fruiting rates.

"Last year, my one hectare of coffee yielded 23 tons, now it's only about 18 tons while costs have increased so the profit is insignificant," said Ms. Hai.

According to VICOFA, the output of the 2022-2023 crop year is expected to decrease by about 10-15% compared to the previous crop year, down to about 1.47 million tons.

The main reason is that the coffee growing area tends to decrease as people switch to other more effective crops such as durian, avocado, or intercropping in the garden. In addition, the impact of weather causes coffee production to plummet.

The report of the Ministry of Agriculture and Rural Development also showed that in the first 5 months of the year, coffee exports reached 882,000 tons and more than 2 billion USD, down 2.2% in volume but up 0.2% in value compared to the same period in 2022.

In the international market, the US Department of Agriculture (USDA) forecasts that world coffee exports will decrease by 3 million bags in the 2022-2023 crop year, down to more than 116 million bags (60 kg bags). Meanwhile, the International Coffee Organization (ICO) maintains its forecast at over 167 million bags, down only 2.1% from the previous crop.

Coffee production and processing enterprises said they are struggling with the pressure of increasing input prices. Speaking to VnExpress , Mr. Nguyen Duc Hung, founder of Napoli Coffee, said that the purchasing power of roasted and ground coffee products as well as ready-to-drink coffee is decreasing due to the impact of the economic recession. His company has to cut all costs to balance the cost of products sold to the market. However, with the current high price of input materials, businesses face many challenges.

"We are having a headache trying to figure out how to reduce input increases and output fluctuations. But with this situation, it is difficult to stop product prices from increasing," Mr. Hung said.

Sharing the same view, Mr. Lam Van Hanh, owner of a roasted coffee production facility in Dak Lak, said he is trying to maintain product prices this month. In July, if the price of green coffee continues to peak, he will have to discuss with his partners and then decide to produce the order.

Businesses are concerned that crop failures and El Nino could cause coffee speculation to recur. Therefore, businesses are asking relevant ministries and agencies to come up with timely solutions for the coffee industry this year.

Last year, Vietnam's coffee area reached about 710,000 hectares, with an output of more than 1.84 million tons. Of which, the 5 Central Highlands provinces accounted for 91.2% of the country's coffee growing area.

Thi Ha

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