Domestic Coffee Price Could Touch 80,000 VND/kg: Is the Market Ready to Adjust Prices Down?

Coffee prices on both floors increased in the last session. Major Robusta producers in Southeast Asia are facing the problem of slow deliveries to the European market due to transport congestion. This continues to push Robusta to a record increase, while Arabica is at its highest level in over a month.

According to preliminary data from the General Statistics Office, Vietnam’s average export coffee price in January 2024 reached 2,955 USD/ton, up 2.3% over the previous month and 35.2% over the same period. 2023.

Responding to the press, expert Nguyen Quang Binh commented: It is likely that coffee prices will continue to increase because inventories in the EU have decreased a lot due to the incident in the Red Sea. However, on the London exchange, the market is getting ready for a price correction this week as futures contracts have been overbought in recent weeks.

For the domestic market, rising prices are causing many obstacles to exports, as businesses do not dare and do not have enough finance to buy export goods. Factors supporting the rise of the London stock exchange remain intact, including low inventories, intermittent supply, and weak output from key suppliers in Southeast Asia.

According to the US Department of Agriculture (USDA), global coffee production in the 2022–2023 crop year will decrease, and exports will also decrease. In particular, a sharp decrease in Vietnam and Colombia, leading to a decline in exports, is the main reason for this adjustment.

Colombia’s Arabica coffee production is forecast to increase by 800,000 bags to 11.5 million bags thanks to higher yields. Even so, Colombia’s output is still nearly 15% below the annual average.

Vietnam’s Robusta coffee output in the 2023–2024 crop year is about 26.6 million bags, an increase of 1.2% compared to the previous crop year, while Arabica decreased by 11.1% to 880,000 bags.

Indonesia’s coffee output is forecast to decrease by 2.2 million bags compared to the previous crop year, down to 9.7 million bags in the 2023–2024 crop year. Mainly due to Robusta production decreasing by 2.1 million bags to 8.4 million bags.

In India, coffee production is forecast to remain almost unchanged compared to the previous crop year, at 6 million bags. In the 2023–2024 crop year, India’s Arabica coffee output is forecast to decrease by 200,000 bags to 1.4 million bags.

During the past week, the basic trend of Robusta coffee prices on the London exchange was to increase in price with only one decrease. The total increase last week amounted to 140 USD/ton. According to some experts, the recent trend of increasing Robusta coffee prices, in addition to the objective factors of supply and demand and tensions in the Red Sea, is also influenced by the large supply in Vietnam preparing for the longest holiday of the year.

The fact that Vietnam is preparing to enter the extended Lunar New Year holiday also affects the trade activities of this product. Therefore, Western roasters are taking advantage of transactions to offset the above impacts.

The price of 77,000 VND for domestic coffee and 3,269 USD/ton in the world market are both historical milestones. With the current upward momentum, many people in the industry expect that domestic prices may continue to increase and reach the mark of 80,000 VND/kg this week or before the Lunar New Year holiday of Giap Thin.

In recent years, Vietnamese Robusta coffee has gained a foothold in the world market. This year’s harvest has basically ended, and coffee prices are currently very high, helping farmers produce sustainable coffee to change and create good livelihoods.

Forecasting the upcoming coffee price trend: Coffee market experts believe that it is likely that coffee prices will continue to increase because inventories in the EU have decreased a lot due to the breakdown of the Asia-Asia shipping route. Europe.

However, on the London exchange, the market is getting ready for a price correction this week as futures contracts have been overbought in recent weeks. For the domestic market, rising prices are causing many obstacles to exports when businesses do not dare and do not have enough finance to buy export goods.

Source: Tincaphe.com