| Export coffee prices increase when supply from Vietnam is forecast to decrease by 20%. Shortage of goods in Vietnam pushes export coffee prices higher |
Inventory data on the ICE-EU Department continues to recover along with technical adjustments after the previous strong increase, which is the main reason creating pressure on Robusta prices. However, this price is still above the highest level in 30 years.
Furthermore, Robusta inventory on the ICE-EU Department at the end of March 27 continued to increase by nearly 3 tons, to 500 tons. This has partly eased concerns about the supply situation in the market.
Arabica prices decreased due to the pull from Robusta prices. However, less positive signals about supply still appear in the market combined with the strengthening of the USD/BRL exchange rate, limiting the downward force of prices.
 |
| Robusta and Arabica coffee prices turned down |
After nearly two months of continuous improvement, standard Arabica inventory on the ICE-US Department suddenly decreased by 1.500 60kg bags in the March 27 session. This decrease has brought the total amount of coffee in storage to nearly 3 bags.
Along with that, the Dollar Index increased by 0,2% yesterday, supporting the USD and pulling the USD/BRL exchange rate up by nearly 0,4%. Easing exchange rate differences have boosted Brazilian farmers' demand for coffee sales.
On the domestic market, green coffee prices will continue to reach levels above 100.000 VND/kg then cool down according to world prices.
According to the Vietnam Commodity Exchange (MXV), Robusta coffee prices continuously set new peaks in the first 3 months of 2024 due to concerns about supply shortages. Robusta prices traded at the London Exchange reached a 30-year high on March 27, up 3% and 30% respectively compared to the beginning of 70 and the same period in 2024.
Marex Group forecasts the global Robusta coffee deficit in 2024/25 to be 2,7 million bags due to reduced production in leading producer Vietnam.
Some retailers are replacing Arabica coffee with Robusta coffee to avoid skyrocketing retail prices. Growing demand is tightening Robusta supply, leading to higher prices.
The Coffee and Cocoa Association (Vicofa) forecasts that the output of the 23/24 crop will decrease by 10% compared to the previous crop, to about 1,6 million tons (equivalent to 26-27 million 60 kg bags). Meanwhile, the Ministry of Agriculture and Rural Development on March 26 expected that Vietnam's coffee output in the 3/2023 crop year could decrease by about 24% to 20 million tons - the lowest level in 1,472 years, due to drought.
According to the latest data from the Ministry of Agriculture and Rural Development, coffee has become the agricultural export product with the strongest growth in the first quarter of 2024. In the first 3 months of 2024, Vietnam exported 799.000 tons of coffee, earning 1,9 billion USD; increased by more than 44% in volume and increased by more than 54% in value compared to the same period in 2023. Accordingly, this agricultural product export turnover has set a historical record when it nearly reached 2 billion USD after only 3 months.
 |
| In the first 3 months of 2024, Vietnam exported 799.000 tons of coffee, earning 1,9 billion USD |
Notably, the export price of this agricultural product increased sharply, on average in 3 months reaching 2.373 USD/ton. In terms of types, Vietnam increased exports of Robusta and Arabica, but decreased exports of Excelsa and processing. Regarding markets, promote Robusta exports to many markets, such as: Italy, Spain, Russia, Indonesia, Belgium, China, Philippines,...
The first three months of 2024 are considered a "golden period" for Robusta coffee prices, continuously setting unprecedented peaks in history. Low supply in main exporting countries, combined with strong demand in leading import markets, creates dual support for the increase in coffee prices in the first months of the year.
However, after many months of facing low supply, the coffee market began to receive new signals from harvesting activities in Brazil and Indonesia.
In Brazil, some early Robusta growing areas in Espirito Santos will begin the coffee harvest in the early second quarter of 2024. According to forecasts from the Crop Supply Agency of the Brazilian Government (CONAB), Robusta production in the 24/25 crop will reach nearly 15 million bags, an increase of more than 7% compared to the previous crop. Among them, Espirito Santos continues to be the main farming area, accounting for 65% of the country's total Robusta production.
In the context of improved coffee production in the 24/25 crop, it is likely that Brazil will continue to promote the export of coffee varieties rich in bitter flavor, extending the recent record streak. From the beginning of the 23/24 season (July 7) to the end of February 2023, Brazil exported about 2 million bags of granular Robusta, an increase of 2024 times compared to the same period last year. Currently, Brazil has entered the final months of the crop year, the monthly export volume of Robusta still maintains 5-5 thousand bags, a record export volume compared to the same period in previous seasons.
Besides Brazil, in April, Indonesia, the world's third largest Robusta exporting country, also entered a new coffee crop. However, due to the influence of weather, the country's Robusta coffee output in 4 is forecast to be low. Production forecast for the 2024/23 season will decrease to the lowest level in 24 years, with about 12 million bags.
