Low coffee inventories continue to push up export coffee prices

Over the past week, the prices of the two coffee products increased by 3.60% for Robusta and 2.16% for Arabica, respectively. The shortage of goods in Vietnam continues to be the main driver of the increase in Robusta prices.

Vietnam Coffee Association (Vicofa) said that the amount of coffee exported in the 23/24 crop year of our country is estimated to decrease by 20% compared to the previous crop year, down to 1.336 million tons. Dry weather is the main reason for the decline in output in the world's leading Robusta exporting country.

For Arabica, in addition to the pull from Robusta prices, low coffee inventories in major consuming markets have supported the price increase. As of March 28, the total number of qualified Arabica on the ICE - US reached 595,209 bags, down 20.41% compared to the same period last year. Although it has been continuously consolidated over the past 2 months, in the long term, this number has not been able to escape the historical low.

Along with that, according to the European Coffee Federation (ECF), the total amount of coffee stored at ports as of the end of February 2024 reached 401.77 tons, the lowest since August 2019.

In the domestic market, it was noted that at the end of last week (March 30), the price of green coffee beans in the Central Highlands and the Southern provinces recovered slightly after a sharp decrease the day before. Accordingly, the domestic coffee purchase price fluctuated between 98,100 - 98,600 VND/kg, an unprecedented high price in the Vietnamese coffee market. The Vietnam Commodity Exchange ( MXV) commented that there is still room for domestic coffee prices to conquer a new peak of 100,000 VND/kg, until new Robusta supplies from Indonesia and Brazil are pushed to the market.

With the information of a large supply shortage from Vietnam, the coffee market has begun to receive new signals from the harvest sources in Brazil and Indonesia. This coffee supplement is one of the most important information for the global market. In particular, the ability to compensate for the new supply from the export activities of these two countries compared to the shortage from Vietnam will be the leading factor determining the price movement of coffee in the second quarter of 2024.

Vietnam is expected to export nearly 600,000 tons of coffee, with a turnover of about 1.9 billion USD.

Vicofa forecasts that the 2023/24 crop output will decrease by another 10% compared to the previous crop, to about 1.6 million tons (equivalent to 26-27 million 60-kg bags). Meanwhile, the Ministry of Agriculture and Rural Development on March 26 predicted that Vietnam's coffee output in the 2023/24 crop could decrease by about 20% to 1.472 million tons - the lowest level in 4 years, due to drought.

Meanwhile, from Brazil, with improved crop 24/25 coffee production, it is likely that the country will continue to boost exports of bitter-tasting coffee varieties, extending its recent record streak. From the beginning of crop 23/24 (July 2023) to the end of February 2024, Brazil exported about 5 million bags of Robusta beans, a 5-fold increase over the same period last year. Currently, Brazil has entered the final months of the crop year, with monthly Robusta exports remaining at 500,000 - 600,000 bags, a record export volume compared to the same period in previous crops.

The Ministry of Agriculture and Rural Development has just announced that in the first quarter of 2024, Vietnam exported nearly 600,000 tons of coffee, with a turnover of about 1.9 billion USD. This is thanks to a record high selling price, nearly reaching the 100,000 VND/kg mark. According to experts, with high coffee prices, farmers have the right to benefit.

Mr. Phan Minh Thong - Chairman of Phuc Sinh Group, said that in the country, the demand for coffee is high but the sales volume is small. This leads to the fact that growers see the high price so they hoard the goods and do not sell. Traders do not have enough goods to deliver to processors, and businesses lose money when buying high and selling low.

Earlier this year, coffee prices increased sharply, making it difficult for businesses to buy coffee for export. Meanwhile, Vietnamese coffee is an irreplaceable product in the European market.

According to the Vietnam Coffee and Cocoa Association (Vicofa), prices are increasing but the amount of Vietnamese coffee has gradually depleted. There is not much stock in warehouses of enterprises and farmers. Therefore, the export volume from now until the end of the season will decrease. Coffee export turnover is likely to reach more than 5 billion USD in 2024.

Our country currently has about 660,000 hectares of coffee growing. Of which, specialty coffee accounts for only 2% of the area, and organic coffee accounts for 3% of the area.

Source: https://congthuong.vn/ton-kho-ca-phe-o-muc-thap-tiep-tuc-day-gia-ca-phe-xuat-khau-tang-312035.html