What causes the coffee market to fluctuate?

According to information from the Vietnam Commodity Exchange (MXV), yesterday's trading session witnessed slight fluctuations in the coffee market. Arabica coffee recorded an increase of 0.7% to 5,512 USD/ton, while Robusta coffee prices also edged up 0.2% to 4,865 USD/ton.

Rainfall is forecast to spread from south to southeast Brazil, the main coffee producing region, but rainfall levels are still low. Rainfall is forecast to gradually increase over the next 10 days and cover most of the main producing regions, with the southeast recording 25-75 mm above normal, above normal, with some areas in the south even recording up to 120 mm. This raises hopes for the 2025-2026 crop supply outlook in Brazil.

Global coffee exports also showed positive signs. Colombia reported exporting 987,000 bags of washed Arabica coffee in September, up 17% from the same month last year.

According to the International Coffee Organization (ICO), global coffee exports in August reached 9.91 million bags, up 8.8% over the same period in 2023. Accumulated from the beginning of the 2023-2024 crop year to the end of August 2024, this figure reached 113.8 million bags, up 10.5% over the same period last crop year.

The Import-Export Department (Ministry of Industry and Trade) assessed that in the 2024-2025 crop year, Vietnam may witness the lowest coffee output in the past 13 years, which will create many challenges for the global coffee market.

In the 2024-2025 crop year, Vietnam may witness the lowest coffee output in the past 13 years. Photo: TL

In the short term, it is possible to see a sharp decrease in supply while demand increases, while the market is still heavily affected by the impacts of climate change, which will create increasing pressure on prices. The Vietnamese coffee industry needs to adjust production, find alternative solutions, and manage supply to cope with complex market changes.

According to the International Coffee Organization (ICO), Robusta coffee prices are moving closer to Arabica coffee prices, something that rarely happened before, while coffee exports in major global markets continue to skyrocket to record levels.

Global coffee prices in September 2024 averaged 258.9 US cents/pound, up 8.4% month-on-month and 69.1% year-on-year.

Of which, prices of Colombian Arabica coffee and other Arabica coffee increased by 5.9% and 6.5% compared to the previous month, reaching 279.3 US cents/pound and 278.5 US cents/pound, respectively. Prices of Brazilian Arabica coffee also increased by 6.2% to 257.2 US cents/pound.

Notably, Robusta coffee recorded an increase of up to 12.8% compared to the previous month, reaching an average of 242.08 US cents/pound.

A report from Mordor Intelligence predicts that the global coffee market will grow from $132.13 billion in 2024 to $166.39 billion in 2029, at a compound annual growth rate (CAGR) of 4.72%.

Growing coffee consumption habits among young people, coupled with higher disposable incomes and urbanization, are the main drivers driving the demand for coffee worldwide.

Figures released by the General Department of Vietnam Customs show that Vietnam's coffee exports in September reached 51,369 tons, worth 286.9 million USD, down 32.6% in volume and 28.7% in value compared to the previous month, but up 0.8% in volume and 70.1% in value compared to the same period last year.

In the first 9 months of the year, Vietnam's coffee exports reached 1.1 million tons, down 11.7% compared to the same period last year. However, due to high prices, export turnover set a new record of 4.3 billion USD, up 37.8% compared to the same period in 2023.

Thus, Vietnam has great opportunities to increase coffee export value, but also needs to make efforts to apply sustainable farming methods to ensure long-term growth momentum.

Vietnam is one of the world’s leading coffee producers. As the harvest begins, more new coffee beans enter the market, providing a large amount of raw material for roasters and coffee brands. This leads to a temporary price drop due to the balance between supply and demand.

In the domestic market, recorded this morning (October 10), coffee prices in the Central Highlands and Southern provinces continued to increase slightly compared to the same time yesterday, fluctuating between 112,800 - 113,500 VND/kg.

Source: https://congthuong.vn/nguyen-nhan-nao-khien-thi-truong-ca-phe-bien-dong-351433.html