Coffee Prices Decrease More Than Increase: How to Forecast Coffee Supply and Demand in the New Crop?

Summarizing last week, Robusta coffee prices decreased slightly, while Arabica prices plummeted. The domestic market moved in the opposite direction to the world price, increasing by 800 VND/kg, despite being at the time of the main harvest. The two exchanges last week increased and decreased rhythmically according to the rise and fall of the USD and information. weather in Brazil.

Expert Nguyen Quang Binh commented that the harvest in Vietnam is strong, but inventories in raw material areas are low because many exporters are buying strongly to deliver contracts signed in December 2023. The above factor helps domestic coffee increase even when the two reference exchanges decrease.

In November 2023, Vietnam’s coffee exports reached 80 thousand tons, earning 252 million USD, down 37.9% in volume and 17.5% in value compared to November 2022. In the first 11 months of 2023, Vietnam’s coffee exports are estimated to reach approximately 1.38 million tons, worth 3.54 billion USD, down 12.9% in volume and 2.5% in value compared to the previous year. same period last year.

The decrease in export volume shows that domestic coffee supply and inventory are lacking, at the lowest level in many years. According to experts, from now until the middle of next year, if major economies in the world reduce interest rates, coffee exports will benefit because this is the time when roasters around the world buy and store coffee hard to go down.

Including the 2023–2024 crop year, coffee exports can reach 4.5–5 billion USD thanks to rising prices while decreasing output. In the short term, experts say the upward momentum this week is still there; the market is in the range of 60,000–61,000 VND/kg.

In addition, the market is also greatly affected by the information that the International Coffee Organization (ICO) expects that global coffee output in the current crop year 2023/24 will increase by 5.8% compared to the previous crop year. , up 178 million bags. The above information immediately pushed world coffee prices back down.

While the DXY index rose to a 3-week high, it prompted speculation on coffee futures exchanges to liquidate their net holdings, pushing coffee down. After a week of trading, the downward trend is prominent when summarizing the whole week. The price of Robusta coffee in London for delivery in January 2024 decreased by 3 USD/ton, and the price of Arabica coffee for delivery in March 2024 decreased by 10.85 cents/lb. .

The domestic market increased by about 800 VND/kg. Domestic coffee prices still maintain their upward momentum even though the harvest is underway and despite a decrease in reference prices on the London floor. World coffee production increased by 0.1% to 168.2 million bags in the coffee year 2022–2023. ICO said: “The stagnant growth rate reflects huge changes at the regional level, with the world The coffee world is clearly divided between the expanding Americas and the shrinking rest of the world.”

Coffee output from Asia and Oceania decreased by 4.7% in the 2022–2023 crop year, while output from Africa decreased by 7.2%, according to Daily Coffee News. The new total global production estimate (Arabica and Robusta) for 2023–2024 is to increase by 5.8% to the equivalent of 178 million 60-kg bags. Arabica is expected to account for 102.2 million bags, while Robusta is expected to increase to 75.8 million bags.

“The biennial production effect will play a large role in the outlook, especially for world coffee consumption, which recorded a 2.0% decline to 173.1 million bags in 2022,” the ICO said. – 2023. The ICO said: “Coffee consumption in the 2022–2023 coffee year did not follow the established pattern precisely due to the impact of high living costs, reduced disposable income, and a prolonged decline in inventory.”.

World coffee consumption is expected to increase by 2.2% in 2023–2024 to 177.0 million bags, with non-producing countries contributing the largest amount to the overall increase.

Source: tincaphe.com