World Coffee Prices Approaching Peak: Domestic Coffee Prices Again “Jumping Up,” New Uptrend Begins?

Increased strongly on both the London and New York exchanges. Coffee prices in London increased the most during the day due to continued concerns about supply from the main growing country, Vietnam. Domestic coffee prices also saw another sharp increase to 4,600 VND/kg. Currently trading in the price range of 109,000–110,400 VND/kg.

While there is not much market news, the weather issue has become the focus, pulling market prices up. Coffee prices increased sharply again. According to expert Nguyen Quang Binh, the belief that the Fed will reduce interest rates in September 2024 helped coffee increase sharply in the past session.

US inflationary pressure decreased for the first time this year in April 2024. It is expected that it will continue to cool down to be a push for the US Federal Reserve (Fed) to cut interest rates, which is expected. in early September. According to assessments, the current coffee market requires perspectives and assessments beyond the reach of output numbers and supply-demand factors.

Information about good and bad harvests sometimes only helps create market psychology, such as a tendency to speculate on rising prices, creating selling pressure if someone likes prices down. Mr. Nguyen Quang Binh commented on the Saigon economy, saying that at futures exchanges, whether prices increase or decrease depends on the Fed’s monetary policy management.

The reason coffee prices have escalated on the domestic market from the beginning of the 2023–2024 crop year to the end of April 2024, but many professional exporters cannot control them, can be said to be due to insufficient purchasing capital and credit. If not timely, professional traders cannot control the price, and the price is in the hands of small speculators.

These people may not hold a large amount of real goods, but they know how to use financial tools well to manipulate prices, allowing prices to climb vertically for profit without regard to whether it is beneficial or harmful to the supply chain, including reputation. industry credit for the world coffee market.

Therefore, to maintain sustainable growth momentum, the most important part is managing capital and credit for strategic industries such as rice and coffee. Coffee prices on the market have now increased to their highest level in 3 weeks and closed close to the peak.

There are concerns that excessive droughts in both major coffee producers, Brazil and Vietnam, are expected to damage coffee crops. Additionally, global output curbs have boosted futures buying.

Last year’s El Nino weather conditions supported coffee prices. The El Nino pattern often brings heavy rain to Brazil in the Western Hemisphere and drought to India and other countries in the Eastern Hemisphere, including Vietnam and Indonesia.

Rain has helped improve the supply picture, but more is still needed and is believed to have come too late in growing areas in particular. Liquidation of long positions, meaning these components had to sell previously purchased amounts in the market, caused prices to decline in the period before May 14.

Gradually liquidating buying positions is necessary to avoid the risk of holding too large a purchase amount. However, with the current situation, it seems that speculative elements in the market are on the buying side and are still not in a hurry to liquidate. position management before the Brazilian winter.

Stocks of certified-grade Arabica coffee held on the New York market are said to have increased by 7,005 bags yesterday, reaching an inventory level of 767,388 bags. Analysts are starting to talk about this bullish cycle. There are some forecasts that there will still be very strong rising waves for both markets, and the session on May 21 is just the beginning of a new rising cycle.

Meanwhile, the belief that the US Federal Reserve (Fed) will reduce interest rates in September 2024 helped coffee increase sharply in the past session. US inflationary pressure decreased for the first time this year in April 2024. The expectation that it will continue to cool down is a push for the Fed to cut interest rates, expected in early September.

In March, coffee exports of all kinds from the South American region increased sharply by 33.1% over the same period last year to 5.5 million bags. In particular, Brazil saw exports increase by 38.8% in March to 4.3 million bags. According to ICO, the strong growth momentum of South America in general and Brazil in particular comes from Brazil’s bumper harvest in the 2022–2023 and 2023–2024 crop years, with output estimated to increase by 8.4% and 9.2%, respectively.

But on the contrary, coffee exports of all kinds from Asia and Oceania decreased by 9.7% in March to 4.5 million bags. Mainly because the exports of two major exporting countries in the region, Indonesia and Vietnam, decreased by 33.5% and 10.2%, respectively, to 0.3 million bags and 3.2 million bags.

As a result, Indonesia’s coffee exports to date in the 2023–2024 crop year have decreased by 21.8% to more than 3 million bags, the lowest level since the 2018–2019 crop. The reason is due to the harvest volume. The country’s plan for the 2023–2024 crop year is estimated to only reach 10 million bags, down from nearly 12 million bags in the previous crop year.

For Vietnam, statistics show that 737,797 tons of coffee were exported in the first 4 months of the year with a record value of 2.5 billion USD, up 2.8% in volume and up to 53.4% in terms of value. value compared to the same period last year.

However, the amount of coffee exported has tended to decrease in recent months. In April alone, it reached only 152,073 tons, worth nearly 573 million USD, down 19.5% in volume and 14.7% in value compared to the previous month, and at the same time, down 7% in value compared to the same period last year. quantity but increased 43.6% in value. This is the third consecutive month that coffee exports have decreased compared to the same period last year, a sign that supply in the current crop year is running out.

Source: Tincaphe.com