Coffee exports still have room for strong growth in price

According to statistics from the Vietnam Commodity Exchange (MXV), at the end of the trading session on August 21 (morning of August 22, Vietnam time), the price list of industrial raw material products witnessed a division between green and red.

Robusta coffee prices are forecast to still have room to increase.

Specifically, Arabica coffee prices continued the momentum from the last session of last week with an increase of 0.53% compared to the reference when the standard inventory was at a low level. However, the increase was still quite weak due to pressure from increasing coffee exports in Brazil.

According to data from the Intercontinental Commodity Exchange (ICE), the standard Arabica inventory here as of August 20 was only 513,665 60kg bags, the lowest level recorded in the past 9 months.

However, Brazilian farmers are still actively promoting the export of qualified Arabica coffee to the international market. Preliminary statistics in the first 18 days of August from the Coffee Exporters Association (CECAFE) show that Brazil exported 1,417,115 60kg bags of Arabica coffee beans, up 26% compared to the 1,128,691 bags shipped abroad in the same period last month.

Meanwhile, the price of Robusta coffee - Vietnam's main coffee product - increased slightly by 0.13% after a week of decline. Robusta coffee prices are being influenced by the contrast in coffee exports in the world's two largest Robusta supply markets.

In Vietnam, the world’s No. 1 Robusta exporter, coffee exports are being constrained by dwindling supplies. Meanwhile, farmers in Brazil, the world’s No. 2 exporter, are ramping up exports, with the amount of Robusta shipped abroad so far this month doubling compared to the same period last month.

Talking to reporters of the Industry and Trade Newspaper, Mr. Nguyen Quang Anh - Director of the Vietnam Commodity News Center, along with the support from the high demand for Robusta coffee, the supply factor could also be an important factor contributing to supporting coffee prices to create new highlights in 2023.

First is the concern about the coffee supply problem in Vietnam. Not only at present with the problem of almost exhausted inventory, looking further, the supply outlook is not very positive in the 2023/24 crop year. The US Department of Agriculture (USDA) has forecast that Vietnam's coffee exports in the upcoming crop year will only be at 27.5 million 60kg bags, the lowest level in the last 3 crop years. Combined with the warning from the Climate Prediction Center of the US National Oceanic and Atmospheric Administration (NOAA), El Nino has appeared and will adversely affect the coffee crop in leading Asian producing countries, especially Vietnam, making the recovery of coffee supply here still a big challenge.

Not only in Vietnam, the two other major coffee supplying countries in the world, Brazil and Indonesia, have shown negative signs regarding coffee supply in the 2023/24 crop year. USDA even forecasts that coffee output in the 2023/24 crop year in Indonesia will be only about 9.7 million bags, down to the lowest level in 12 years.

If the above forecasts are correct, domestic coffee prices in Vietnam, as well as Robusta coffee prices in the world in the second half of this year, still have a lot of room for growth.

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