Demand changes, processed coffee exports get good prices

According to the Vietnam Commodity Exchange (MXV), in the coffee market, at the end of last week (September 25-30), Robusta prices increased slightly by 0.04%, trading at 2,484 USD/ton. Unfavorable coffee export figures in Vietnam have somewhat reduced the pressure on prices.

In the report on the socio-economic situation in the first 9 months of 2023, the General Statistics Office estimated that Vietnam's coffee exports in September reached 65,000 tons, a sharp decrease of 32.7% compared to the same period last year. The cumulative export volume in the first 9 months of the year was 7.3% lower than the same period in 2022.

Robusta coffee prices increased last week

Volume decreased, demand increased, Vietnam's coffee export price has now reached a record level. The average coffee export price in the first half of September 2023 continued to increase, reaching 3,151 USD/ton, up 6.3% compared to the first half of August 2023 and 32.1% compared to the same period, a very high price in recent years.

Meanwhile, Arabica prices continued to weaken for the second consecutive week, down 3.3% from the reference price. Positive supply prospects in Brazil combined with increased sales demand from the country's farmers put pressure on prices.

Rainfall has been replenished in Brazil’s main coffee growing region and the localized heatwave zone above 30 degrees Celsius has also narrowed, helping flowering coffee trees grow better. This reduces concerns about poor crop yields in 2024-25 if the dry spell persists.

The contrast in monetary policy decisions between the US Federal Reserve (FED) and the Central Bank of Brazil (BCB) has caused the USD/Brazil Real exchange rate to increase by nearly 2% over the past week. The increasingly loose exchange rate differential has stimulated demand for coffee from Brazilian farmers to earn more domestic currency.

According to MXV, this week, Arabica prices may continue to decline if exports continue to be boosted in Brazil.

Indonesia's Sumatra Robusta coffee exports in August reached 16,166 tonnes, down nearly 55.5% from the 36,313 tonnes shipped in the same period last year, government data showed.

In the domestic market, the price of green coffee beans in the Central Highlands and the Southern provinces decreased slightly by VND100/kg compared to the previous day, being purchased at around VND65,900 - 66,700/kg. Thus, compared to the previous week, the domestic coffee price has decreased slightly by VND100 - 200/kg.

Vietnam increases investment in coffee processing

Speaking to reporters of the Industry and Trade Newspaper, Mr. Nguyen Van Thao - Chairman of Bich Thao Coffee Cooperative - Son La said that Bich Thao Coffee Cooperative is cooperating with 800 ethnic households to switch to growing specialty coffee trees, promoting investment in preliminary processing and processing technology. Currently, the cooperative's specialty coffee for export has reached 97%, the remaining amount is for domestic use.

By planting, processing and roasting, the cooperative's products are now free from output problems or price instability. The profits from selling coffee have brought stable income to growers and the cooperative. Currently, Son La's specialty Arabica coffee for export can reach 230,000 - 270,000 VND/kg.

Currently, the world's coffee consumption trend is to prioritize high-quality coffee. Currently, our country's largest coffee importers such as the United States and the EU are shifting from importing Robusta coffee beans to processed coffee. In particular, the United States is increasingly importing more Arabica coffee; gradually reducing Robusta coffee imports, from 6.1 million bags (366,000 tons) in the 2011/2012 crop year to 3.6 million bags in the 2020/2021 crop year. Along with that, the proportion of processed coffee imports increased from 3.1% in the 2018/2019 crop year to 6.4% in the estimated 2023/2024 crop year.

According to statistics from the European Coffee Federation (ECF), in the EU, the proportion of processed coffee also increased from 2.3% in 2017 to 5.5% of total imported coffee products in 2021.

To boost exports and increase the value of Vietnamese coffee, at the end of 2014, the Ministry of Agriculture and Rural Development issued Decision No. 5499/QD-BNN-CB approving the planning of the coffee processing and preservation system associated with production and export until 2020, with a vision to 2030.

Accordingly, Vietnam will prioritize investment in deep processing facilities to increase the value of coffee products and move towards sustainable development. Specifically, by 2030, green coffee will only account for 55-70% of total coffee export turnover, the rest will be processed coffee.

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