Supply pressure, coffee export prices continue to skyrocket nearly 3.9%

Low Robusta coffee inventories at the Intercontinental Exchange (ICE) and concerns about heatwaves affecting production in Brazil have provided double support for prices.

Coffee prices continue their upward trend.

According to the closing report on December 10th, Robusta coffee inventories on the Intercontinental Exchange (ICE-EU) stood at 34,760 tons, gradually returning to their historical low of 33,630 tons at the end of August 2023. Simultaneously, customs data showed that cumulative coffee exports from Vietnam in the first 11 months of 2023 remained 10% lower than the same period in 2022.

In addition, concerns that widespread heatwaves across Brazil's main coffee-growing regions could reduce coffee production in the 2024/25 season also contributed to the price increase.

Arabica's upward trend has slowed somewhat compared to Robusta, as certified Arabica stocks at the ICE-US exchange increased by approximately 1,000 bags, bringing total coffee inventories temporarily back from their lowest level in over 24 years. Data from the Coffee Exporters Association (CECAFE) shows that green coffee exports in November in the country still increased by 18.2% compared to the same period last year.

On the domestic market, as of this morning (December 13th), the price of bulk green coffee beans in the Central Highlands and Southern provinces fluctuated between 63,000 and 63,800 VND/kg, a sharp increase compared to yesterday. The first two trading sessions of the week pushed the domestic market up by more than 3,000 VND/kg.

Vietnam's coffee exports surged again in November 2023 (Photo: Dak Lak Online Newspaper)

According to the latest data from the General Department of Customs, after seven consecutive months of decline, Vietnam's coffee exports rebounded strongly in November 2023, reaching 119,297 tons, a sharp increase of 172.8% compared to October 2023. Export turnover in November 2023 reached US$356.68 million, an increase of 126.4% compared to October 2023 and an increase of 16.8% compared to November 2022.

In the first 11 months of 2023, Vietnam's coffee exports reached nearly 1.42 million tons, equivalent to $3.64 billion, a decrease of 10.4% in volume but an increase of 0.4% in export value compared to the same period in 2022.

After eight consecutive months of increases, the average export price of coffee in November 2023 adjusted downwards, reaching US$2,990 per ton, down 17% from the previous month, but still a strong increase of 26.2% compared to the same period in 2022. For the first 11 months of 2023, the average export price reached US$2,573 per ton, an increase of 12% compared to the same period in 2022.

Regarding the consumer market, in November, the volume of coffee exported to most major markets increased sharply compared to the previous month.

Specifically, exports to the European Union (EU) increased 3.6 times to 40,257 tons; and exports to the United States increased 5.8 times to 10,244 tons. Notably, the Russian market saw a tenfold increase to 12,198 tons, surpassing the US market to become Vietnam's second largest coffee export market last month.

Export coffee prices are expected to remain high, and may even reach new highs in 2024 due to concerns about global coffee supply.

According to a report by the Foreign Agricultural Service (FAS) of the U.S. Department of Agriculture (USDA), the potential decrease in the global supply of robusta coffee from major producing countries in Southeast Asia has prompted funds and speculators to return to the futures market to increase buying, albeit in limited quantities due to caution regarding interest rates.

In Vietnam, FAS estimates that the 2023-2024 crop yield will decrease to 27.8 million bags from the 31.3 million bags estimated in May 2023 due to unfavorable weather conditions. Estimated carryover stocks have decreased to only 390,000 bags instead of the previously estimated 2.76 million bags.

FAS also forecasts that Indonesia's total coffee production for the 2023-2024 season will decrease by more than 18% compared to the previous 2022-2023 season, down to 9.7 million bags. Indonesia is expected to prioritize raw coffee for the domestic industry, reserving only about 5 million bags of green coffee for export, a decrease of up to 35% compared to the previous season.

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