Coffee prices continue to increase, Robusta coffee increased by more than 400 USD/ton in 2 days

At the end of the most recent trading session, the price of Robusta coffee in London for delivery in July 2024 increased by 183 USD/ton, at 3,917 USD/ton, and for delivery in September 2024 increased by 171 USD/ton, at 3,844 USD/ton.

Arabica coffee prices for July 2024 delivery increased by 3.25 cents/lb to 220.45 cents/lb, and for September 2024 delivery increased by 3.25 cents/lb to 219.25 cents/lb.

Coffee prices have surged to a three-week high, with Robusta gaining more than $400 a tonne in just two days. Concerns that extreme drought in Brazil and Vietnam will damage coffee crops and limit global output have fueled buying by funds and speculators on the exchange.

Many industry experts believe that fundamental market factors such as supply shortages, especially Robusta coffee, along with strong consumption demand are still supporting coffee prices. The sharp price drop in the first two weeks of May 2024 is only short-term due to the impact of the world market.

Coffee prices continue to increase, Robusta coffee increased by more than 400 USD/ton in 2 days

Although the scenario of prices returning to the old peak of nearly 140,000 VND/kg or not will depend on many factors as Brazil and Indonesia are entering the harvest season, domestic coffee prices have now established a new price level, significantly higher than previous years. At the same time, experts say that prices are unlikely to fall too deeply to low price levels like previous years.

According to experts, this uptrend will still have very strong uptrends for both markets, and yesterday's session, Tuesday, May 21, was the beginning of a new uptrend.

The current price increase is mainly due to investors' renewed concerns about the supply outlook from Brazil and Vietnam. Currently, hedge funds have increased their net long positions in anticipation of further shortages of Robusta from Vietnam in the coming time. Vietnam is currently the world's largest exporter of Robusta.

However, some analysts emphasize that whether coffee prices will return to their old peak at the end of April depends largely on whether speculative cash flows return strongly.

The US Department of Agriculture's prestigious Global Agriculture Information Site has revised its initial forecast for Colombia's October 2023 to September 2024 coffee crop higher by 6.09% to a total of 12.20 million bags.

The report also forecasts Colombia’s upcoming 2024/2025 crop, with an expected increase of 1.64% compared to the previous coffee year, reaching a total of 12.40 million bags. Colombia is expected to export slightly more than in the current coffee year.

Certified graded Arabica coffee stocks held on the New York market were reported to have fallen by 2,025 bags yesterday, bringing the stock to 765,363 bags.

Certified Robusta stocks held on the London Coffee Exchange are said to have increased by 63,333 bags as of May 20, 2024, to a total of 741,000 bags, of which Brazilian Conillon/Robusta accounts for more than 90%.

Technically, the price of Robusta coffee after two sessions of huge increase is only considered to have gone nearly halfway in this increasing cycle. Although the increase of this type of coffee is still very strong, there is an obstacle at $3967. Although this level is not too far from the momentum of this type of coffee, it is considered very difficult to overcome, based on the price in July. But in case the market can overcome this level, it is true that the Robusta market has a real problem and the old peak of $4338 reached on April 25, 2024 will take place again.

In a recent report, the Import-Export Department (Ministry of Industry and Trade of Vietnam) stated that the current downward pressure on the coffee market comes from the liquidation of buying positions of speculative funds. However, it is not excluded that there will be short-term recoveries when these funds temporarily stop liquidating.

The Ministry of Agriculture and Rural Development currently forecasts that Vietnam's coffee output in the 2023/2024 crop year could decrease by 20% to 1.472 million tons - the lowest level in the past 4 years, mainly due to the negative impact of the El Nino phenomenon.

Marex Group Plc (UK) financial group currently forecasts that the global Robusta coffee market in the period 2024 - 2025 will have a shortage of up to 2.7 million bags of coffee (60 kg/bag), mainly due to a decrease in production in Vietnam.

In the export market, in April 2024, Vietnam's coffee export price averaged 3,768 USD/ton, up 6% over the previous month and 54.5% over the same period last year. In the first 4 months of the year, coffee export prices increased by 49.1% to an average of 3,389 USD/ton.

Source: https://congthuong.vn/gia-ca-phe-tiep-da-tang-trong-2-ngay-ca-phe-robusta-tang-hon-400-usdtan-321795.html