Declining inventories push export coffee prices back to their highest level

According to the Vietnam Commodity Exchange (MXV), at the end of the trading session on January 25, Arabica prices decreased by 1.32%, while Robusta prices reached a 16-year high when they increased by 1.37% compared to the reference price.

The Dollar Index rose sharply as the US GDP growth in the fourth quarter reached 3.3% compared to the previous quarter, higher than the market's forecast and showing that the US economy is still quite good. This made investors worry that the US Federal Reserve (FED) will prolong the tightening monetary policy cycle. At that time, money gradually shifted from risky assets such as coffee to safe-haven markets such as the USD.

Robusta coffee prices continue to rise, reaching new peaks

In addition, the standard Arabica inventory on the ICE-US Exchange at the close of trading on January 24 continued to recover, increasing by 1,585 60kg bags to 257,478 bags. At the same time, the amount of coffee awaiting reclassification also increased by nearly 1,000 bags to 53,913 bags, expanding the margin for inventory recovery in the coming time.

For Robusta coffee, fluctuations in the US dollar also affected the price of this commodity. However, the decrease in inventories in the closing report on January 24 pulled prices back up. Specifically, the amount of Robusta coffee stored on the ICE-EU decreased by 40 tons, down to 30,630 tons, a record low since 2014.

Meanwhile, market sources indicate that coffee farmers in Southeast Asian regions continue to limit sales in the expectation that world prices will rise further as supply is forecast to be significantly short.

In the domestic market, this morning (January 26), the price of green coffee beans in the Central Highlands and the Southern provinces increased by 500 - 700 VND/kg. Accordingly, the domestic coffee price is currently being purchased at around 74,900 - 75,600 VND/kg.

In 2023, Vietnam's coffee exports reached 1.61 million tons, with a turnover increase of 3.1% and a record high value of 4.18 billion USD. Currently, Vietnamese coffee is present in more than 100 countries and territories.

Many coffee exporting enterprises in our country have also been fully booked until the end of the first quarter of 2024. To maintain this growth momentum, Vietnamese coffee enterprises have expanded their market share to a number of new markets, while in familiar markets such as Europe, enterprises have also prepared carefully in advance to meet new regulations.

Vietnam's coffee industry will continue to benefit from the rise in Robusta coffee prices due to concerns about supply shortages.

To maintain export growth momentum, in 2024, the Coffee - Cocoa Association will strive for more and more member businesses to achieve organic production certifications such as Organic, Rainforest Alliance or UTZ.

2024 is expected to continue to be a difficult year for businesses due to many fluctuations in the world economy.

In late 2023, world coffee prices continued to rise and hit record highs due to concerns about supply shortages from the world's leading producing countries. In addition, there were concerns about supply delays when the Europe-Asia shipping route through the Suez Canal was disrupted.

In a recent report, the Import-Export Department (Ministry of Industry and Trade) forecasted that Robusta and Arabian coffee prices will continue to increase due to market concerns about high shipping costs and unfavorable weather conditions in Brazil's coffee growing regions.

The upward price trend was also reflected on the London exchange. Specifically, Robusta coffee futures for delivery in January 2024, March 2024, May 2024 and July 2024 increased by 21.9%, 15%, 13.6% and 12.8% respectively (compared to November 30, 2023), to USD 3,075/ton, USD 2,837/ton, USD 2,766/ton and USD 2,704/ton.

There is a lot of conflicting information affecting global coffee prices in 2024. In the first quarter of 2024, Robusta and Arabica coffee prices will remain high due to concerns about supply shortages and the lowest inventory in the past 12 years.

In the latest report of the United States Department of Agriculture (USDA), the estimated world Robusta coffee inventory in the 2023/2024 crop year reached 26.5 million bags (60kg type), down 16.7% compared to the previous report and down 4% compared to the estimate for the 2022/2023 crop year.

The US Department of Agriculture (USDA) forecasts global coffee production in the 2023-2024 crop year to reach 171.4 million bags, while consumption will reach a record 169.5 million bags. World coffee inventories are expected to fall to a 12-year low of 26.5 million bags.

The agency also believes that this year the Vietnamese coffee industry will continue to benefit from the increase in Robusta coffee prices due to concerns about supply shortages.

Although Vietnam has a bumper crop, supply is not as strong as in previous years. People are tending to limit sales to wait for prices to rise, pushing domestic coffee prices up continuously, according to the Import-Export Department (Ministry of Industry and Trade).

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