Coffee prices experience shocking week of increase

Arabica coffee prices rose more than 5% to $7,011 per tonne, hitting a 47-year high; Robusta coffee prices once surpassed $5,500 per tonne, setting a new historical peak.

According to the Vietnam Commodity Exchange (MXV), the world raw material market had relatively mixed developments in the past trading week (November 25 - December 1). At the end of the week, selling pressure dominated, pulling the MXV-Index down slightly by 0.6% to 2,184 points. Notably, in the energy market, crude oil prices plummeted amid cooling tensions in the Middle East and cautious sentiment ahead of the Thanksgiving holiday. Going against the trend, the industrial raw material group recorded a strong increase, in which the prices of two coffee products had an impressive increase this week.

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MXV-Index

Coffee prices experience shocking week of increase

Closing the last trading week, green dominated the price list of industrial raw materials, in which the two most prominent items were coffee.

Prices for both commodities rose for the fourth consecutive week and set new records. Arabica coffee prices rose more than 5% to $7,011/ton, at one point hitting a 47-year high; Robusta coffee prices once surpassed $5,500/ton, setting a new historical peak. Speculation combined with concerns about supply in major producing countries remain important factors supporting prices.

Industrial raw material price list

Speculative factors continue to be promoted, partly due to the shift of cash flow from safe haven markets to profitable investment channels such as coffee, and partly due to expectations that supply from major coffee producing countries has not improved.

Coffee supply and demand information shifted towards increasing concerns about supply in Brazil and Vietnam. This helped increase important support for prices.

Rainfall in Minas Gerais, Brazil’s largest coffee-growing state, continues to be below historical averages. Somar Meteorologia reported that the region received just 6mm of rain last week, or 10% of the historical average. The low rainfall has raised concerns that coffee trees will not be able to fully recover and develop, leading to a sharp drop in production compared to the current crop. Brazil’s main coffee-growing region has previously experienced a prolonged, historically dry period, prompting analysts to slash their forecasts for coffee production in the 2025-2026 and 2024-2025 seasons.

In its global market report, Hedgepoint Consulting predicted Brazil's coffee output for the 2025-2026 crop year at around 65.2 million bags. Of which, Arabica coffee output is expected to be at 42.6 million 60kg bags, down slightly by 1.4% from the previous crop. The firm also said the forecast could change based on future weather conditions.

In Vietnam, the harvest has entered its main season but farmers have not yet ramped up sales. Reuters reported in its weekly Asian coffee newsletter that Vietnamese farmers have harvested about 30% of their output but have not sold much because they are in the drying process. Previously, the General Department of Customs announced that Vietnam's coffee exports in the first half of November reached only 20,933 tons, down 45% and 3% respectively compared to the same period in 2023 and the same period last month. The lower volume of coffee exports in the first half of November compared to October reflects the delay in export activities.

In the domestic market, coffee prices in the Central Highlands and the Southeast this morning (December 2) were recorded at 129,500 - 130,500 VND/kg, down slightly by 200 VND/kg compared to yesterday. However, compared to the same period last year, coffee prices have now more than doubled.

Crude oil prices plunge as Middle East tensions ease

According to MXV, crude oil prices plummeted amid signs of cooling tensions in the Middle East and a wait-and-see attitude in the market ahead of the OPEC+ meeting to discuss production policy.

Energy price list

WTI crude oil prices fell 4.55% last week to $68/barrel, while Brent crude oil prices fell 2.97% to below $73/barrel.

In the Middle East, Israel and the militant group Hezbollah reached a ceasefire agreement on November 27. This helped ease market concerns about the possibility of a disruption in crude oil supplies from the region due to the war, and had put a lot of pressure on oil prices last week.

Investors also traded cautiously, awaiting the December policy meeting of the Organization of the Petroleum Exporting Countries and its allies (OPEC+). Last week, OPEC+ announced that it would postpone its policy meeting to December 5, instead of the originally scheduled December 1. Sources said that some OPEC+ members are discussing further delaying the production increase plan until the end of the first quarter of 2025, due to concerns about slowing demand growth while crude oil supply outside the group is increasing.

In addition, negative data on fuel inventories in the US also contributed to the "bearish" impact on crude oil prices. Specifically, according to a report by the US Energy Information Administration (EIA), the country's commercial crude oil inventories in the week ending November 22 reached 428.4 million barrels, down 1.8 million barrels compared to a week ago. However, the inventory decrease was mainly due to the US importing less oil, as the country's net crude oil imports averaged 1.4 million barrels/day in the review week, down 1.9 million barrels/day compared to the previous week. In addition, gasoline and distillate inventories in the review week increased by 3.31 and 0.42 million barrels, respectively, compared to a week ago, indicating a decrease in US fuel demand.

Prices of some other goods