Coffee price paradox like "gold price"

Coffee prices continue to rise, fear of supply chain disruption Low coffee inventories continue to push up export coffee prices

Last week, the price of green coffee beans in Vietnam skyrocketed to a historic high of over VND100,000/kg. This week, although the price has slightly decreased to VND98,500/kg, it is still a high level that makes it difficult for many coffee exporting enterprises to purchase coffee to pay for orders to their partners.

Coffee price today is at 98,500 VND/kg

Sharing about the current coffee market, Mr. Nguyen Ngoc Luan, Director of Meet More Coffee - said that currently there is a paradox that coffee prices are like "gold prices".

Mr. Luan said that the domestic coffee price has increased dramatically and is now 1,000 USD/ton higher than the export price of coffee on the world market. This is an unusual price increase, with speculation, continuous price inflation, buying and selling between intermediaries without the participation of production and processing enterprises. Mr. Luan is concerned that this price increase will lead to the risk of causing the coffee price to "burst the bubble".

Sharing with the press, a representative of the Vietnam Coffee and Cocoa Association (VICOFA) said that export companies are currently in a difficult position because they are all in a situation of buying far away and selling far away.

For example, at the beginning of the year, an exporter signs a contract but delivers to customers in March or May. At the time of signing the contract, the domestic price of green coffee was only 60,000 VND/kg, now at the time of delivery the price is 100,000 VND/kg. The business that buys the goods to deliver to its partner will certainly suffer a heavy loss. If it does not deliver, it will violate the contract and must compensate the customer.

Meanwhile, from an expert perspective, Master Nguyen Quang Binh also affirmed that 2024 will be a year of price fluctuations. Because of the fluctuations, we need to look at the reality that coffee prices will return to a certain level and cannot remain high forever.

In the report published by the Ministry of Agriculture and Rural Development, coffee is the agricultural product with the strongest increase in export in the first quarter of 2023. Specifically, Vietnam exported nearly 800,000 tons of coffee, an increase of 44% in volume, with a turnover of 1.9 billion USD, an increase of 54%. This is a record export value in the first 3 months of the year for the coffee industry. With the current amount of coffee exported, it is estimated that the export of the entire 2023/24 crop has exceeded 1 million tons, so the domestic supply is not much left, so the trend of coffee prices continues to be high.

However, the reality is that up to now, many large enterprises in this industry have signed orders with customers until September 2024. With coffee prices continuing to remain high as they are now, losses are inevitable. Therefore, according to Mr. Nguyen Nam Hai, Chairman of VICOFA, the Association has continuously warned businesses to limit buying from far away to avoid risks.

In addition, business opinions also suggested that management agencies need to closely manage to avoid market disturbances, avoid short-selling problems, as well as limit the situation of breaking contracts and commitments signed between farmers and businesses.

Source