| Robusta coffee prices fell 2% after 2 sessions of slight increases. Pressure from Brazil's supply sources, coffee export prices continue to weaken. |
According to the Vietnam Commodity Exchange (MXV), at the end of the trading session on February 26, the prices of two coffee products decreased by 0.39% for Arabica and 0.33% for Robusta, respectively.
A weaker US dollar and pressure from a continued recovery in certified inventories kept coffee prices mixed during the session.
On the one hand, the weakening Dollar Index, down 0.1%, has pushed money flows from safe-haven assets to other markets such as stocks and commodities. This helps boost buying power for coffee.
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| World coffee prices fell across the board |
On the other hand, the pressure from increasing inventories has pulled prices down again. In the closing report of February 23, the standard Arabica inventory on the ICE-US increased by 8,330 bags, reaching nearly 324,160 bags. Moreover, the number of coffee awaiting classification remained at a higher level of 127,420 bags, which is a good sign for the possibility of an upcoming expansion.
Arabica coffee prices have come under pressure as the risk of drought in Brazil has eased. The latest information shows that Minas Gerais state, which accounts for about 30% of Brazil’s Arabica coffee production, received 59.5 mm of rain last week, equivalent to 131% of the historical average.
Meanwhile, the additional cargoes awaiting grading on the ICE Futures US floor amounted to 127,421 bags, with 89% of the cargoes originating from Brazil. This will help consolidate the inventory on the exchange in the coming time, ensuring supply to the market.
As of the end of December 2023, the available coffee inventory in Europe was only 7.28 million bags (bag = 60kg), down 43.3% compared to the same period last year, according to the report of the European Coffee Federation (ECF). Robusta coffee alone decreased by 47.2% from 4.56 million bags to 2.41 million bags in the same period.
Arabica exports from the world’s largest coffee supplier are still being assessed quite positively. According to the Brazilian Coffee Exporters Association (CECAFE), as of February 23, Brazil has issued export permits for 2.34 million bags, up 13.98% compared to the same period in 2023.
For Robusta, Vietnam’s positive export situation in January is still a factor that helps cool prices, despite inventory data on the ICE-EU Exchange turning weak after two previous increases. Specifically, Robusta inventory on the ICE Exchange ended the session on February 25 down 160 tons, bringing the total amount of coffee stored here down to 22,840 tons.
According to the General Department of Customs, in the first half of February, the country exported nearly 57,000 tons of coffee, with a turnover of 184.4 million USD. In total, from the beginning of the year to February 15, the amount of coffee exported reached nearly 295,000 tons, with a turnover of 911 million USD.
Compared to the same period last year, the volume of exported coffee increased by only 16.7% but the turnover increased by 66.8%. Accordingly, the average export price of coffee reached nearly 3,100 USD/ton, an increase of nearly 43% compared to the same period last year.
Vietnam's main coffee export markets are Europe, the US, China, Russia, Indonesia... Of which, Europe is the largest import market for Vietnamese coffee with 87,700 tons, turnover reaching over 263 million USD; followed by countries such as Germany, Italy, Spain...
According to the Department of Crop Production (Ministry of Agriculture and Rural Development), by the end of January 2024, the coffee growing area in the Northern region reached about 25.4 thousand hectares, mainly concentrated in provinces such as Son La (18.8 thousand hectares) and Dien Bien (2.6 thousand hectares). The newly planted area in this region reached 1 thousand hectares.
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| In 2024, coffee exports could reach 4.5 - 5 billion USD |
Currently, the 2022/2023 coffee harvest in the North has been completed, and people are actively taking care of the new 2023/2024 planting season to ensure the growth and quality of coffee trees this crop year.
After the Lunar New Year, the price of green coffee beans in the Central Highlands provinces continued to increase sharply and for the first time reached a record of VND80,000/kg. Currently, the price of coffee in the domestic market has reached a historical peak in the past 30 years, surpassing VND83,000/kg, an increase of 70% compared to the same period last year.
The coffee market will continue to fluctuate with the weather in the Arabica coffee growing regions of Brazil. With exports from Southeast Asia quite limited, the only hope left is from Brazil. Once there is news of favorable or unfavorable weather in the coffee growing regions, coffee prices will fluctuate down or up.
VICOFA forecasts that with this situation, coffee exports could reach 4.5 - 5 billion USD in 2024. This will be a new record year for Vietnam's coffee export turnover.
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