Coffee Prices Turn Down, World Worry About Supply: Vietnam Will Set Record Export Milestone of 5.5–6 Billion USD

Turned down sharply at the end of the session. Domestic coffee prices are currently fluctuating between 117,000 and 118,000 VND/kg. This price range has nearly doubled compared to the beginning of this year due to reduced supply.

In July, coffee export prices maintained their upward momentum, reaching 4,844 USD/ton, up 5% compared to June and double compared to the same period last year. At the end of the session, Brazil’s strong coffee export figures in July 2024 (44%) pushed both floors down.

The market also made appropriate technical adjustments after a few days of strong increases. The Import-Export Department, Ministry of Industry and Trade, predicts that Vietnam’s coffee exports in the remaining months of the third quarter will decrease due to low supply.

By October, when the 2024–2025 coffee harvest begins, the new coffee supply will increase again. Coffee supplies for export are looking forward to the new harvest, and it is forecast that the whole year’s coffee exports could set a record of 5.5–6 billion USD.

Vietnam’s coffee output in the 2023–2024 crop year is estimated to reach only 1.47 million tons, down 20% compared to the previous crop year and the lowest level in the past 4 years, according to data from the Ministry of Agriculture and Rural Development.

Due to unfavorable weather conditions, coffee output for the 2024–2025 crop year may also continue to decrease. From now until September, Vietnam may only have about 200,000 tons of coffee left for export, if not counting the inventory from the previous year.

Vietnam’s Import-Export Management Agency under the Ministry of Industry and Trade said that coffee exports will decrease in the third quarter due to limited supply. The coffee supply is expected to increase again in October, right at the beginning of the 2024–2025 coffee harvest.

Before turning down, world coffee prices experienced strong increases when information about frost affected Brazil’s output. The colder weather in Brazil has spooked investors and forced some to close short positions.

According to Bloomberg, Arabica coffee prices returned to the strongest increase after nearly a month of continuous decline thanks to forecasts of colder weather in Brazil, which encouraged roasters to buy. According to the International Coffee Organization (ICO), the world may face a shortage of up to 35 million bags (60 kg/bag) of Robusta coffee by 2040.

In addition, world coffee prices are still supported by increased demand from European buyers before the provisions of the EUDR anti-deforestation law come into effect. According to the Vietnam Coffee and Cocoa Association (Vicofa), unfavorable weather factors combined with the outbreak of mealybugs and red spiders will reduce the next Robusta crop in Vietnam by 15% to 20%.

According to Vicofa’s estimates, the Robusta coffee output in the 2023–2024 crop is about 26.7 million bags; the next crop in 2024–2025 in Vietnam will be between 21.4 and 22.7 million bags. This figure is significantly lower than Volcafé’s previous preliminary forecast of 24 million bags and much lower than the recent estimate of 27.85 million bags from the US Department of Agriculture (USDA).

The Vietnamese coffee industry is facing many challenges from natural conditions, geopolitical tensions, and rising production costs. However, with its position as the world’s second-largest coffee exporter and efforts to improve the value chain, the Vietnamese coffee industry still has the opportunity to overcome difficulties and continue to make important contributions to the national economy.

Vietnam continued to be the second-largest coffee supplier to the EU market in the first months of the year, with a turnover of more than 1 billion EUR, up 42.4% over the same period last year. This result helps Vietnam’s market share in the EU increase from 15.2% to 20%.

According to the Import-Export Department, the demand for coffee from European importers is currently increasing due to the trend of stockpiling inventory ahead of the deadline to comply with the European Union Deforestation Regulation (EUDR) standards. The EUDR is aimed at reducing the import of products related to deforestation and requiring strict assessment and traceability measures for items including coffee.

The Import-Export Department said: Last year, the EU’s coffee imports from the world market decreased by 10% due to the economic recession and high inflation, causing people to tighten their spending. However, when the economy recovers, the demand for coffee consumption among Europeans will increase again.

The European Union has the highest per capita coffee consumption in the world, although consumption levels in member markets vary. The European coffee market is estimated to reach USD 47.88 billion in 2024 and is forecast to reach USD 58.14 billion in 2029, growing at an average rate of 3.96% during the period 2024–2029.

Coffee is one of the most popular drinks in Western Europe due to its deep cultural roots and widespread use in consumers’ daily lives. In addition, the demand for coffee is also increasing in the region due to the number of new coffee shops opening, the development of coffee shop chains, and the increasing number of coffee machine buyers. Therefore, Europe is considered a large potential market that any coffee-producing country wants to exploit.

Source: KTĐT.vn