Supply decreases, demand increases, coffee prices will remain high

Coffee export prices hit record high

According to the Import-Export Department ( Ministry of Industry and Trade ), in August 2024, Robusta and Arabica coffee prices on trading floors increased sharply, continuously recording record highs in many years due to unfavorable weather in Brazil and Vietnam, affecting global supply.

Coffee output in the 2024-2025 crop year is forecast to decrease by 5% to 15% (ANanh: NH)

In addition, all three key speculative components of the market (non-commercial hedge funds, fund management companies, and market index funds) increased their net long positions, causing prices to rise sharply. Meanwhile, the amount of sorted Arabica coffee held on the New York market as of August 27, 2024, decreased by 420 bags, to 843,725 bags.

In the domestic market, it is estimated that in August 2024, Vietnam exported 80,000 tons of coffee, worth US$423 million, an increase of 3.9% in volume and 11.1% in value compared to July 2024; compared to August 2023, there was a decrease of 5.4% in volume but an increase of 64% in value. For the first eight months of 2024, Vietnam exported 1.06 million tons of coffee, worth US$4.03 billion, a decrease of 11.9% in volume but an increase of 36.1% in value compared to the same period in 2023. The decrease in coffee exports compared to the same period last year is due to low supply.

It is estimated that in August 2024, the average export price of Vietnam's coffee will reach 5,293 USD/ton, up 6.9% compared to July 2024 and up 73.4% compared to August 2023. In the first 8 months of 2024, the average export price of Vietnam's coffee is estimated to reach 3,805 USD/ton, up 54.5% over the same period last year.

Mr. Nguyen Nam Hai - Chairman of the Vietnam Coffee and Cocoa Association (Vicofa) - informed that since Vietnam started exporting coffee, this is the first time in history that the price of this type of bean has exceeded the 5,000 USD/ton mark. However, Vietnam's coffee inventory for export in September is not much left, the supply has run out.

The coffee harvest will begin next October, peaking in November and December. However, our country's coffee output in the 2024-2025 crop year is estimated to decrease by about 10% compared to the previous crop (the output in the 2023-2024 crop year is estimated at about 1.5 million tons).

Speaking with a reporter from the Industry and Trade Newspaper, Mr. Le Duc Huy, General Director of Simexco DakLak, stated that it is currently predicted that 100% of production will continue to decrease, and there is no more inventory to carry over from this year's harvest to next year. Therefore, the available supply to the market remains limited. From now until the end of this harvest season, supplies will be scarce. A significant number of roasters will need to purchase Robusta coffee for the new season, leading to continued market difficulties. "This year, the shortage started in May, and next year, it is expected to occur earlier, possibly from March," Mr. Le Duc Huy shared.

Coffee prices are expected to remain high.

According to Mr. Le Duc Huy, Brazil is suffering from frost, which affects coffee production. At the same time, he said that it is difficult to make any comments on prices because the current market is not only in a picture of supply and demand, but also financial issues, war, and crisis. All are possible. However, if it is purely about supply and demand, prices may not be able to decrease and will remain high.

Similarly, after a survey trip to coffee-growing areas in Dak Lak , the director of a coffee-producing enterprise also predicted that coffee production in the next season could decrease by 5-10%. This is because some coffee-growing areas have shown signs of encroachment by other crops such as durian trees, which has reduced the area under coffee cultivation. In addition, the drought in the middle of this year has also affected coffee production in many provinces in the Central Highlands.

Regarding export coffee prices, Mr. Nguyen Nam Hai commented that, despite the abundant coffee production during harvest season, prices are likely to remain stable at a high level, benefiting farmers. In the near future, this commodity is unlikely to experience a significant drop due to the impact of climate change and the El Niño phenomenon causing droughts across global coffee-growing regions, leading to reduced supply. Global geopolitical conflicts and tensions in the Red Sea are increasing shipping costs and other expenses. Furthermore, many global financial speculators are choosing coffee (after oil and gold) as a speculative investment. These are major factors driving up global coffee prices and keeping them high, including in Vietnam.

The Import-Export Department also forecasts that coffee prices will continue to remain high next month due to reduced supply and increased demand. Coffee production in Vietnam for the 2024/25 crop year is expected to decline sharply, reaching its lowest level in 13 years. Meanwhile, the mainstream coffee consumer market in the Northern Hemisphere is gradually recovering after the summer holidays, which will contribute to boosting some physical coffee trading activity in the coming months before the winter roasting season in Europe and the United States.

Source: https://congthuong.vn/cung-giam-cau-tang-gia-ca-phe-se-van-duy-tri-o-muc-cao-345807.html