Coffee Prices Continue to Conquer Peaks: Is Global Supply Shortage or Excess?

Coffee Prices Continue to Conquer Peaks: Is Global Supply Shortage or Excess?
Experts say that in the last trading session, Robusta coffee and gold reached the highest level in history, while Arabica reached the highest level in the past 6 months. Although prices have increased, the amount of real goods exported from Vietnam is very small, and Robusta is still constantly moving towards the peak of 30 years ago.

Domestic coffee prices being traded in the Central Highlands provinces today are getting closer to the 110,000 VND/kg mark. The highest transaction price was 109,000 VND/kg recorded in Dak Nong, and the lowest was 108,000 VND/kg recorded in Lam Dong.

Recently, prolonged intense heat has caused many ponds, lakes, small rivers and streams, and irrigation reservoirs in the Central Highlands provinces to run out of water. As noted by TTO earlier this week, in Gia Lai, facing the shortage of fresh water, to ensure water for irrigation, farmers in this province had to drill wells to find underground water sources to irrigate coffee trees that were growing fruit.

In the coffee area of Ia Sao commune (Ia Grai district), irrigation reservoirs have now dried up, and people are relying entirely on water from drilled wells. Farmers in this area said that coffee is currently producing young berries, so ensuring enough water for irrigation is very important. If there is a lack of water on this occasion, the coffee will fall or shrink, leading to reduced productivity.
In the market, the output factor is becoming very worrying as the output of coffee crops in Brazil and Vietnam continues to support the upward price trend. At the present time, major suppliers are reporting much larger export volumes than previous years.

However, looking at the long term, whether it is Brazil or Vietnam, the recent encouraging export numbers seem to signal a more serious domestic inventory deficit, broader than the world market during this period. next time.

Poor harvests in Vietnam, combined with shipping difficulties in the Red Sea, have led to a spike in Robusta coffee prices and boosted demand for Brazilian Robusta coffee. Experts expect Robusta coffee production in Brazil to be larger in 2024, with new crops starting to hit the market around June or July.

Meanwhile, the country currently does not have much inventory left from the 2023 crop. At the beginning of this year, ICO forecast that global coffee production in the 2023–2024 crop year will increase by 5.8% compared to the previous crop year. 178 million bags. Consumption is expected to increase by 2.2% to 177 million bags; the world coffee market will have a surplus of 1 million bags in the 2023–2024 crop year.

However, the actual situation does not seem to be the same. Supply difficulties are being talked about in many places. Marex Group Plc is the unit that has forecast the global Robusta coffee deficit in 2024/25 to be 2.7 million bags due to a decline in output in Vietnam as well as global output.

Regarding the world’s No. 1 Robusta Supply, Vietnam, the recent prolonged intense heat has caused many ponds, small rivers and streams, and irrigation reservoirs in the Central Highlands provinces (Vietnam’s main coffee-growing region) to run out of water. . Meanwhile, coffee is currently producing young berries, so ensuring enough water is very important. If there is a lack of water on this occasion, the coffee will fall or shrink, leading to reduced productivity.

Although recent data from the General Department of Vietnam Customs shows that Vietnam’s coffee exports in March 2024 reached nearly 189,000 tons, an increase of 17.7% over the same period in 2023, According to the Department of Commodity Exchange Hoa Viet Nam (MVX), prolonged drought is making the condition of young fruit dry out and becoming more serious in the Central Highlands.

This makes the whole market worried that new crop coffee output will continue to decline deeply. Sharing the same situation as coffee in Vietnam, Brazilian Arabica is also facing the risk of water shortage due to little rain. Concerns Supply from leading producing countries has pushed coffee to increase sharply in recent times. Besides, coffee supply growth is slowing around the world as farmers switch to other profitable crops and businesses.

Source: Tincaphe.com