Vietnam's coffee exports benefit in price

According to statistics from the General Department of Customs, Vietnam's coffee exports in July reached 108,872 tons, down 22.6% compared to the previous month. Vietnam's cumulative coffee exports in the first 7 months of this year decreased by 3.4% compared to the same period last year, at 1,116,804 tons.

Vietnam's coffee exports will benefit in price.

Regarding world coffee prices, the Vietnam Commodity Exchange (MXV) reported that at the end of the trading session on August 9, the prices of the two coffee products returned to opposite trends. Arabica prices turned to weaken as coffee exports in Brazil were boosted in the first days of August. On average, Brazil exported 8,374.1 tons of green coffee per day in the first week of August 2023, up 37.7% compared to the 6,082.1 tons of coffee that the country shipped on average per day in August 2022. Meanwhile, Robusta prices continued to improve amid concerns about a shortage of supply in the market.

Standard Arabica stocks on the Intercontinental Exchange (ICE) remained flat at 527,942 60kg bags, an eight-month low, with no new supply additions at the moment.

However, the market is very positive about the new crop coffee output in 2023 in Brazil, especially the strong increase in Robusta coffee.

In the Robusta market, Robusta inventories on the ICE are currently recorded at 50,190 tons, the lowest in the past 7 years. With the supply from Brazil seemingly not enough to offset the scarcity from the Vietnamese market, inventory data is unlikely to increase in the short term.

However, at present, Brazil is actively promoting Robusta coffee exports when the new crop supply is available. This also partly alleviates market concerns, thereby reducing the weakening force of Robusta coffee prices.

According to the Ministry of Industry and Trade's Agricultural, Forestry and Fishery Market Bulletin, in the first months of 2023, most major economies in the world reduced coffee imports due to a sharp decrease in consumption demand while the economy still faced difficulties, inflation tended to decrease but remained high, and geopolitical tensions persisted.

The European Union and the United States are the two largest coffee consuming markets in the world. Therefore, the reduction of coffee imports from these two markets will have a negative impact on the world coffee industry. However, coffee imports from Vietnam to these two markets have grown positively in recent times, especially in the context of the EU people's coffee consumption preferences shifting to Robusta specialty coffee.

According to the European Statistical Office, in the first four months of 2023, the EU imported 6.38 billion EUR (equivalent to 7.1 billion USD) of coffee from the world, down 1.7% compared to the same period last year. Meanwhile, the EU increased its coffee imports from Vietnam by 34.1%, reaching 540 million USD (equivalent to 601 million USD). Vietnam's coffee market share in the total value of EU coffee imports from the world accounted for 8.46% in the first four months of 2023.

Similar to the EU, according to the US International Trade Commission, in the first 5 months of 2023, US coffee imports decreased by 10.2% in volume and 9.5% in value compared to the same period last year, reaching 617.1 thousand tons, worth 3.46 billion USD. However, the US still increased coffee imports from Vietnam by 41.3% in volume and 35% in value, reaching 80.76 thousand tons, worth 182.62 million USD. Vietnam's coffee market share in the total import value of the US accounted for 5.28% in the first 5 months of 2023.

It is forecasted that in the third quarter of 2023, Vietnam's coffee exports will slow down due to the lack of abundant supply. However, Vietnam's exported coffee will benefit in price due to the world's consumer preferences shifting towards Robusta coffee.

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