World Coffee Prices Increase Sharply: Weak USD, Market Faces “Perfect Storm”

The first session of the week prospered on both the London and New York exchanges, supported by the weakening USD. Domestic coffee prices did not fluctuate much in the first session of the week, trading between 123,000 and 124,000 VND per kg.

Coffee is supported by the weakening USD. In the early morning of June 4, on the US market, the US Dollar Index (DXY), measuring fluctuations in the greenback with six major currencies (EUR, JPY, GBP, CAD, SEK, and CHF), decreased by 0.63%. , down to 104

World Coffee Prices Increase Sharply: Weak USD, Market Faces “Perfect Storm”

The first session of the week prospered on both the London and New York exchanges, supported by the weakening USD. Domestic coffee prices did not fluctuate much in the first session of the week, trading between 123,000 and 124,000 VND per kg..04.

On the world market, Robusta coffee prices increased by more than 3%, regaining what was lost in last week’s session, while Arabica recovered half. Climate uncertainties, disruptions in international trade routes, and the speculative nature of many investment portfolios have “created a perfect storm in the world coffee market.”.

According to Fairtrade International, the umbrella organization representing farmers and cooperatives in coffee-producing countries, unfavorable weather conditions, especially in Southeast Asia and South America, are disrupting “a fragile balance between supply and demand” and pushing prices up.

The organization said that prolonged droughts in Vietnam, the main Robusta coffee-producing country, have caused damage to crops. Meanwhile, Brazil, the main source of Arabica coffee, suffered heavy rains that affected the harvest.

In addition to Brazil, other countries such as Colombia, Peru, and Honduras are also in the coffee harvest season. Output is expected to increase slightly but is still lower than general market demand, so prices still tend to increase. In particular, Arabica coffee futures prices in July still increased by 122.1 USD to 6,222 USD/ton.

According to some experts, the notable point in the current market is that Arabian products continue to increase even though Brazil, the largest supply source, is in harvest season. This further reinforces the assertion that the global coffee supply is continuing to be in short supply.

In addition, Brazil also has a large amount of Robusta coffee with the familiar name Conilon, currently priced nearly equal to Vietnam. However, because Brazil is in the harvest season, the market is constantly fluctuating because buyers want to delay buying to wait for good prices.

In addition, international investment funds continue to monitor developments related to US financial policy, so they are trading moderately.

Source: Tincaphe.com