Coffee Prices Maintain a Downtrend: Brazilian Products Are Coming; How Much Does Vietnam Import?

Continuously decreased on both London and New York exchanges. The high USD and weak Brazilian real caused a decline in the market. Coffee prices are also under pressure due to the progress of the Brazilian coffee harvest.

Domestic coffee prices continued to decrease by 1,200 VND/kg, falling to around 119,000 VND/kg. They are currently trading in the price range of 119,000–121,200 VND/kg.
In the early morning of June 12, 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), increased by 0.1%. , reaching 105.25.

Coffee prices on the two floors continued to decrease ahead of the two-day meeting of the US Federal Reserve (Fed) this week. The Fed is expected to keep interest rates unchanged after the meeting. Economists are still closely watching for any clues about the timing of the first interest rate cut in four years. The above information caused the USD to reach a 4-week peak.

Coffee prices are being pressured by the faster progress of Brazil’s coffee harvest, which promises to improve. Supply has been under stress for a long time, especially for Robusta products. Independent analyst Safras & Mercado reported that its estimate was that the harvest was nearly 29% complete as of early June.

In addition, the weakening of the Brazilian Real during the session was also another negative impact on coffee prices when the local currency of the world’s leading coffee supplier dropped to a low level earlier this week. highest in 17 months against the USD.

The latest COT report from the London Robusta coffee market shows that fund management companies have also increased their net long position by 10.97% as of June 4 to register a position at 27,434 lots, equivalent to 4,572,333 bags.

The FAS office under the US Department of Agriculture currently estimates that Brazil’s coffee output in the 2024–25 crop year will reach about 69.9 million 60-kg bags, an increase of 5.4% over the previous year. Arabica coffee production is expected to increase by 7.3% to 48.2 million bags, while Robusta coffee production is forecast at 21.7 million bags, an increase of 1.4%.

Producers generally have abundant financial resources and are entering the peak period of the Arabica coffee harvest. This is expected to continue to create a solid level of price resistance in the market. In a recent report, the Import-Export Department forecast that coffee prices will increase again, mainly due to increased concerns among investors about the supply prospects from Vietnam.

Currently, hedge funds have increased their net buying positions with the prediction that Robusta supply from Vietnam will continue to be scarce in the near future. According to information from trading house Volcafe, Vietnam’s Robusta coffee output in the 2024–2025 crop year is estimated to reach 24 million bags, the lowest level in 13 years, due to unfavorable weather.

In May, the price of Robusta coffee in the domestic market decreased sharply compared to the end of April. Domestically, coffee prices are suffering when pepper has increased sharply recently. The domestic pepper price has exceeded 180,000 VND/kg.

Doubled compared to the beginning of the year, exceeding all forecasts of market participants. The increase in pepper invisibly attracts capital from coffee, causing this market to lose its excitement. However, the supply of Robusta coffee is still scarce. Agents in Vietnam estimate that the next crop’s output will decrease by 4–7% due to drought in March and April. Therefore, the medium- and long-term growth momentum of coffee is still very high.

Summarizing the 2022-2023 crop year and the direction of the 2023-2024 crop year, the representative of the Vietnam Coffee-CCocoa Association said: At the end of the 2022-2023 crop year, the total volume of Vietnamese coffee imported from other countries around the world was about 102,100 tons with a value of nearly 300 million USD, an increase of more than 14% in volume and an increase of 9% in value compared to the 2021-2022 crop year.

Of which, imported coffee beans in the 2022-2023 crop year are 98,600 tons, worth up to 246 million USD, up 19% in volume and 23% in turnover compared to the 2021-2022 crop year. Imports of processed coffee in the 2022-2023 crop year are about 3,500 tons, worth more than 53 million USD, down 46% in volume and 29% in value compared to the 2021-2022 crop year.

Vietnam imports coffee mainly from the following the following countries: Laos, Indonesia, Brazil, Belgium, Colombia, Germany, Papua New Guinea, India, Peru, Thailand, Honduras, Singapore,… A Vietnam representative explains that Vietnam coffee has been imported for many years, like other agricultural products (rice, cashew nuts, etc.) from other countries, mainly for export processing.

Source: KTĐT.vn