Coffee Prices Continue to Be Pushed Up: Domestically Unprecedented Increase, Unexpected Development?

The domestic coffee market continues to increase strongly compared to the same time yesterday. The first two sessions of the week pushed the domestic market up more than 3,000 VND/kg.

Expert Nguyen Quang Binh said that the “rising price” of coffee in the past two days is partly due to concerns about a sharp decline in the supply of new crops from Vietnam. Although the harvest is ongoing, prices are still increasing steadily. Experts say this shows that output is not satisfactory.

Meanwhile, new-crop coffee inventories have been low due to strong exports since the beginning of the year. According to a report from the USDA, Vietnam’s coffee inventory at the end of the 2022–23 crop year was only 339,000 60-kg bags, the second-lowest level in the past 15 years.

The reason is that coffee exports reached a record high of 1.78 million tons in the 2021/22 crop year, and the 2022/23 crop production decreased by 10-15% due to bad effects from the weather, causing coffee production to decrease by 10-15%. In the 2022–23 crop year, it is not enough to meet export orders.

The above situation caused the amount of coffee reserved for reserves to be reduced to serve export purposes, pushing this figure down from 3.58 million bags to only 339,000 bags. Local coffee shortages lead to many sad consequences for the entire industry.

Typically, coffee prices in the last 4 months of the 2022–23 crop year increased, but Vietnamese farmers and export businesses did not benefit much because the supply only remained at foreign direct investment enterprises. Vietnam even has to increase imports to meet export orders despite being the world’s largest Robusta supplier.

Dry weather in the main coffee-growing regions of Brazil is causing concern in the market, pushing prices up sharply. According to a weather report, Brazil’s Minas Gerais state last week received only 53% of the historical average in rainfall, while forecasting a new heat wave could stress next year’s crop.

According to the Coffee Export Council (Cecafé) in Brazil, exports in November reached 4.329 million bags of coffee of all kinds, up 15.4% over the same period last year, of which Robusta and Conilon exports reached 856,000 bags, an increase of 678% over the same period.

In addition, the market still maintains the El-Nino weather forecast over the Pacific Rim at the end of December this year and early next year. Price developments in Vietnam’s supply are surprising, when the General Department of Vietnam Customs reported preliminary data showing that coffee exports in November reached 119,297 tons (about 1,988 million bags), down 7.44%. compared to the same period last year.

Therefore, cumulative coffee exports in the first 11 months of the year reached a total of 1,415,983 tons (equivalent to 23.4 million bags), down 10.41% over the same period, supporting the upward price trend. Domestic coffee prices not only increase steadily but also increase very strongly in the middle of the harvest season, which rarely happens.

Experts say that the situation shows that the new crop supply is causing concern and output is less than satisfactory. Meanwhile, new crop coffee inventories are low due to strong exports since the beginning of the year. Lack of supply and a sharp increase in prices mean that farmers do not benefit, and businesses have to increase imports to meet export orders.

Source: Tincaphe.com