Signs of recovery or price storm coming?

At the end of the trading session on October 15, 2024, the world coffee market witnessed a vibrant trading day with prices increasing sharply on both the London and New York exchanges. Specifically, the price of Robusta coffee on the London exchange increased by 2.9%, approaching the 5,000 USD/ton mark, while the price of Arabica coffee on the New York exchange increased by nearly 4%, reaching the highest level in 1 and a half weeks.

The price increase was largely due to certified coffee inventories falling to a four-month low in New York and a four-and-a-half-month low in London. The low inventories reflect strong demand for coffee, while supplies are limited by adverse weather in major coffee-producing countries such as Brazil.

Excessive dryness in Brazil could reduce coffee yields and is supporting prices. Rainfall in Brazil has been consistently below average since April, damaging coffee trees during the crucial flowering stage and dampening prospects for the country’s 2025-26 Arabica crop.

Brazil's Minas Gerais region received 33.4 mm of rain over the past week, or 99% of the historical average, the Brazilian meteorological agency Somar Meteorologia reported. Minas Gerais is Brazil's largest Arabica coffee-producing state, accounting for about 30% of production. However, even if rains are sufficient in the coming months, it will not be enough to recover the production lost to the drought that has lasted more than four months.

Coffee price forecast October 16, 2024: Signs of recovery or upcoming price storm?

In Vietnam, the new harvest season is approaching, which typically begins in late October and early November. Although weather conditions have improved after a severe drought earlier this year, the 2024-2025 crop is expected to be even lower than last year’s, which was already the lowest in four years. This is expected to impact Robusta supply and could sustain price increases in the near term.

However, as the new crop begins to arrive on the market, expected in the final weeks of the year, Robusta supplies should improve somewhat, helping to ease market tensions. Meanwhile, some regions in Colombia and Central America are entering their main harvest season, which should increase washed Arabica supplies in the coming months.

According to the ICO, Vietnam's coffee exports fell 12.1% year-on-year in the first 11 months of the 2023/24 crop year to just 24.09 million bags (1.445 million tons). This shows that among the main sources of global coffee exports, only Vietnamese coffee has a real crop failure.

In the 2023-2024 crop year (from October last year to September this year), Vietnam exported nearly 1.45 million tons of coffee, expected to earn 5.32 billion USD - down 12.7% in volume but up 30.4% in value. Coffee export turnover last crop year also reached a record level for the industry so far.

Notably, processed coffee (roasted and instant) exported about 130,150 tons (not converted to green coffee), with a turnover of 898 million USD - an increase of 44.6% in volume and 76% in value. This figure shows that the coffee industry has increased deeply processed products, increasing export value in addition to exporting raw materials.

Forecasting coffee prices in the coming crop year, Mr. Phan Minh Thong - founder of Phuc Sinh Coffee said that from this October, prices will be more stable and not fluctuate as strongly as recently, and the market will also stabilize again. However, prices will be set at a new, very high level, around 4,000 USD/ton, equivalent to Vietnamese raw coffee costing 90 - 100 million VND/ton, and will not decrease any lower.

In summary, coffee prices are on a strong upward trend due to the impact of low inventories, drought in Brazil and high consumption demand. However, the price fluctuations of coffee are also affected by many other factors such as harvest output, trade policies and financial markets. Consumers should closely monitor the developments of the coffee market to make appropriate choices.

*Information for reference only.

Source: https://congthuong.vn/du-bao-gia-ca-phe-ngay-16102024-dau-hieu-phuc-hoi-hay-bao-gia-sap-den-352578.html