As Brazil enters harvest season, what will happen to Robusta coffee prices?

At the end of the trading session on March 22, world coffee prices fell across the board due to the recovery of coffee supply. Specifically, Robusta coffee prices on the ICE Futures Europe London exchange turned down, with the May 2024 delivery term down 27 USD, trading at 3,358 USD/ton. The July 2024 delivery term down 24 USD, trading at 3,264 USD/ton. Average trading volume was low.

Arabica coffee prices on the ICE Futures US New York exchange decreased, with the May 2024 delivery term decreasing by 0.85 cents, trading at 184.85 cents/lb. Meanwhile, the July 2024 delivery term decreased by 0.65 cents, trading at 184.00 cents/lb. Trading volume was high on average.

Experts said that coffee prices were under pressure at the end of the week as they were overbought and inventories on the floor were high. In addition, the strong USD also pushed the market down.

Early morning of March 23, in the US market, the US Dollar Index (DXY) measuring the greenback's fluctuations against 6 major currencies (EUR, JPY, GBP, CAD, SEK, CHF) increased by 0.45%, reaching 104.43. The USD is heading for its second consecutive week of increase.

The International Coffee Organization (ICO) February 2024 Market Report said that in the 2023/2024 crop year, global coffee output is estimated at 178 million bags, of which Arabica coffee will be about 102.2 million bags (accounting for 57.4%) and Robusta coffee will be 75.8 million bags.

Global coffee consumption is forecast by the ICO to continue to grow steadily, reaching 177 million bags, up 2.2% compared to 2023. The growth momentum will mainly come from the Asian region. Thus, in the 2023/2024 crop year, the global coffee market could have a surplus of about 1 million bags.

Brazil is expected to record a third consecutive year of increased coffee production, a feat that has happened seven times in the 144-year history of coffee growing in the world's largest coffee grower and exporter, according to Reuters.

Experts say this period of continuous coffee production growth could extend into 2025, largely due to increased Robusta production in the country. Marcio Ferreira, president of the Cecafe export group, said next year’s crop would also increase, extending the period of increased production to four years.

Vietnam's Robusta coffee output in the 2023-2024 crop year may decrease by another 2-3%

Vietnam's Robusta coffee prices are at the highest in the world. In the first quarter of the year, coffee prices continued to increase due to concerns about supply shortages. If in November 2023, coffee prices were from VND59,000 - 60,000/kg, in December 2023 they were VND62,000 - 69,000/kg. In January 2024, prices continuously increased to VND82,000/kg; by early March they were VND86,000/kg and have now surpassed VND95,000/kg.

Vietnam is the world's number 1 producer and supplier of Robusta. With the advantage of low prices, Vietnam is chosen by roasters around the world, especially in Europe and the US, as the main supplier of Robusta.

According to experts from the Vietnam Coffee and Cocoa Association (Vicofa), the hot price increase in the first months of the year in the market comes from the imbalance of supply and demand, when the world's coffee inventory is at a record low, forcing businesses to find every way to buy and pay contracts. Tensions in the Red Sea are also a catalyst for global coffee prices to peak.

International traders speculate that Vietnam’s Robusta coffee output in the 2023-2024 crop year could fall by another 2-3%. According to Vicofa, Vietnam’s coffee output in the 2023-2024 crop year is expected to fall to 1.6-1.7 million tons, down from 1.78 million tons in the 2022-2023 crop year.

Importers are shifting to buying from India and Brazil because Vietnamese goods are selling at high prices. From April 2024, when Brazil enters its crop season, coffee prices may start to fall.

Source: https://congthuong.vn/khi-brazil-buoc-vao-vu-thu-hoach-gia-ca-phe-robusta-se-ra-sao-310399.html