Drought concerns push up coffee export prices

Coffee export prices reverse to increase again, inventory drops to record low Tightening supply, coffee export prices fluctuate

At the end of the weekend trading session, the price of Robusta coffee in London for May 2024 delivery decreased by 22 USD/ton, at 3,744 USD/ton, and for July 2024 delivery decreased by 19 USD/ton, at 3,679 USD/ton.

Arabica coffee prices for May 2024 delivery increased by 5.75 cents/lb, to 212.5 cents/lb, and for July 2024 delivery increased by 5.2 cents/lb, to 211 cents/lb.

Last week, Robusta coffee futures for May delivery increased by a total of 265 USD. Arabica coffee futures for May delivery increased by 23.65 cents. Domestic coffee prices continued to increase by 5,000 VND/kg.

Coffee export prices are increasing, but Vietnamese coffee is running out, and there is not much in stock. The Vietnam Coffee Association (Vicofa) said that Vietnam's coffee export volume in the 2023-2024 crop year is estimated to decrease by 20% compared to the previous crop year, down to 1.336 million tons.

At the end of March 2024, after 5 consecutive weeks of increase, Robusta coffee prices narrowed the gap with Arabica to about 700 USD. This week's strong price increase helped Arabica coffee re-establish the gap with Robusta coffee to nearly 1,000 USD/ton.

The sharp increase in Arabica coffee prices this week suggests that some businesses’ warnings that the price of Robusta coffee is too high will cause the market to seek new supplies, seem to be correct. On the contrary, the price of Arabica coffee increased to 566 USD/ton, double the increase of Robusta in just 1 week, also showing high demand for coffee consumption and purchase in the world market. This reinforces the view of many that the trend of coffee prices will continue to increase.

Due to the impact of climate change, in Vietnam, the dry season this year came earlier than usual and the prolonged hot weather caused the water level in dams in some provinces to drop rapidly. Concerns that the drought could affect crops caused coffee prices to increase sharply last week.

Lo ngại tình trạng hạn hán khiến giá cà phê xuất khẩu tăng mạnh

Vietnam's coffee exports in the 2023-2024 crop year are estimated to decrease by 20% compared to the previous crop year, down to 1.336 million tons.

In early April, the Central Highlands entered the peak of the dry season, and this year's drought is forecast to be more severe than previous years. Water levels and flows in rivers and streams have gradually decreased and remained lower than the average for many years.

According to statistics from Eurostat, in 2023, the EU imported 4.05 million tons of coffee from the world, worth up to 19.17 billion EUR (equivalent to 20.79 billion USD). Compared to 2022, the EU's coffee imports decreased by 9% in volume and 10.2% in value.

The reason for the EU's reduced coffee imports is the economic recession and high inflation, which has caused people to tighten their spending. However, as the economy recovers, Europeans' demand for coffee is expected to explode this year.

According to the European Coffee Federation, the European Union has the highest per capita coffee consumption in the world. The European coffee market size is estimated to reach $47.88 billion in 2024 and is forecast to reach $58.14 billion in 2029, growing at an average rate of 3.96% during the period 2024-2029.

With an export volume of 652 thousand tons of coffee, worth 1.53 billion EUR (1.66 billion USD), Vietnam became the second largest supplier to the EU in 2023 in terms of output, and ranked third in terms of value.

Notably, Vietnamese coffee exports to the EU market only decreased slightly by 1.4% in volume and 0.02% in value compared to 2022. Therefore, Vietnam's coffee market share in the EU's total imports from the world increased from 14.85% in 2022 to 16.08% in 2023.

Currently, the price of green coffee beans in our country has exceeded 100,000 VND/kg - the highest price ever. Specifically, the average coffee price on April 6 was 102,500 VND/kg. In key regions such as Dak Lak, Lam Dong, Gia Lai, Dak Nong, Kon Tum, the highest price of green coffee beans was 104,000 VND/kg.

Mr. Nguyen Nam Hai - Chairman of the Vietnam Coffee and Cocoa Association - said that Vietnam is the world's largest producer of Robusta coffee. Global roasters still have high demand and are looking for sources from Vietnam.

Many experts believe that Vietnamese coffee prices will increase at least until May 2024, before Indonesia enters its new crop. Vietnamese coffee beans may become the most expensive in the world in 2024.

In particular, Europe's import demand is very large and the supply is almost entirely from Vietnam's Robusta coffee, at least from now until the end of April 2024.

According to exporters, Vietnamese Robusta coffee has a relatively solid and irreplaceable position in the world market. Despite the shortage of supply, Vietnamese coffee beans are still sought after by foreign roasters, who are waiting for them instead of looking for new sources of supply. This will be the basis and room for coffee export prices to continue to increase.

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