Poor supply outlook, coffee export prices break record

According to the Vietnam Commodity Exchange (MXV), the prices of two coffee commodities increased for the fourth consecutive session. Of which, Robusta coffee prices increased by 1.5%, surpassing 5,500 USD/ton - the highest closing price in the past week; Arabica coffee prices increased by nearly 2% compared to the reference price to 6,038 USD/ton, setting a new record high. Extreme weather and poor supply prospects in major producing countries continue to be the leading factors supporting prices.

Vietnamese traders said the weather is still supportive for crops but trading is quiet. A trader in the Central Highlands coffee belt said some traders have started looking for coffee but are cautious as some are still facing financial problems since late last year when prices started to spike, while others are uncertain about the weather in the coming days.

Poor supply outlook, coffee export prices break record

Vietnam accounts for about 30% of the global supply of Robusta, the type of coffee used primarily for instant drinks and espresso blends. But drought, followed by weeks of heavy rain, has severely affected many growing regions ahead of the harvest that is set to begin in October. According to the U.S. Department of Agriculture, more than 95% of Vietnam’s output next season will be Robusta.

Consulting firm Hedgepoint forecasts that global coffee production will be in deficit for the fourth consecutive year due to drought, which has reduced output in the world's two leading producers, Brazil and Vietnam. Hedgepoint estimates Brazil's 2024-2025 coffee output at 63 million bags, down 3 million bags from the previous crop; Vietnam's coffee output at 27 million bags, lower than previously forecast.

Also due to the prolonged drought affecting production activities, the Brazilian government's Crop Supply Agency (CONAB) cut its forecast for Brazil's 2024 coffee harvest by more than 4 million bags to 54.79 million bags, down 0.51% from 2023 and nearly 7% from the previous forecast. Arabica coffee production decreased by 2.52 million bags compared to the previous report and Robusta coffee decreased by more than 1.5 million bags to 15.2 million bags, down 6% from the previous year.

In Brazil, although rain is forecast, the amount of rainfall is low, so some areas are still in a state of local drought. Rainfall is not expected to improve significantly until mid-October. Meanwhile, the effects of hot and dry weather have been reflected in the upcoming harvest season in Vietnam, but the more worrying thing is that the La Nina weather pattern could cause storms during the main harvest period, disrupting the harvest and reducing coffee production.

In Vietnam, Robusta coffee export prices are now nearly $900 per ton higher than Arabica coffee. Previously, Robusta coffee was priced at half that of this higher-value coffee.

In the first half of September, Vietnam exported 15,155 tons of Robusta coffee, earning $76.6 million, at an average price of $5,053 per ton. Meanwhile, Arabica coffee exports reached 1,129 tons, worth $4.7 million, at an average price of $4,166 per ton.

Mr. Nguyen Nam Hai, Chairman of the Vietnam Coffee and Cocoa Association (VICOFA), shared: The high price of Robusta coffee brings great benefits to Vietnam's coffee consumption because up to 94% of Vietnam's coffee growing area grows this coffee variety.

Mr. Trinh Duc Minh, Chairman of Buon Me Thuot Coffee Association (Dak Lak province) commented that the main reason for the sharp increase in coffee prices, especially Robusta, is still due to the shortage of supply in major producing countries such as Brazil, Vietnam, Indonesia, etc.

In particular, in Vietnam, in previous years, the output was regularly at 30-31 million bags (each bag weighs 60 kg), but in the last crop it was only 27.5 million bags and will continue to decrease in the future as farmers tend to switch to crops with higher economic value, typically durian.

The 2024-2025 coffee crop is about to be harvested and is facing drought. It only rained in May and June, but the little rain prevented the coffee beans from growing, so the yield will definitely decrease.

In the domestic market, prices are currently only fluctuating slightly, around 120,000 - 125,000 VND/kg and there are very few transactions due to the exhausted supply of the old season, and the limited supply of new crop coffee because the harvest peak will not come until November.

Source: https://congthuong.vn/trien-vong-nguon-cung-kem-tich-cuc-gia-ca-phe-xuat-khau-pha-moc-ky-luc-348702.html