At the end of the weekend trading session, the price of Robusta coffee in London for May 2024 delivery decreased by 22 USD/ton, at 3,744 USD/ton, and for July 2024 delivery decreased by 19 USD/ton, at 3,679 USD/ton.
Arabica coffee for May 2024 delivery increased by 5.75 cents/lb to 212.5 cents/lb, and for July 2024 delivery increased by 5.2 cents/lb to 211 cents/lb.
The New York Stock Exchange is still supported by the International Coffee Organization (ICO) March Trade Report, which said that global coffee exports in February 2023 fell by 20.23% year-on-year to 7.4 million tons.
Global coffee exports in the first five months of the current coffee crop year 2022/2023 totaled only 43.77 million tonnes, down 8.5% from the same period last year.
The Brazilian real continued to rise against the US dollar as signs of a US recession fuelled risk aversion, helping Arabica maintain gains while Robusta had to adjust as London entered overbought territory.
Early this morning, in the US market, the US Dollar Index (DXY) measuring the fluctuations of the greenback against 6 key currencies (EUR, JPY, GBP, CAD, SEK, CHF) increased by 0.07%, reaching 101.92.
The US dollar edged up slightly in the last trading session, as investors weighed how important US employment data released during a stock market holiday could impact Federal Reserve policy.
Assessing the global coffee supply and demand situation, experts say that the world will not lack or face difficulties in the supply of Arabica coffee, but will have difficulties with Robusta coffee.
Many experts believe that Vietnamese coffee prices will increase at least until May 2024, before Indonesia enters its new crop. Vietnamese coffee beans may be the most expensive in the world in 2024. Currently, Vietnam is the world leader in both export volume and quality of Robusta coffee.
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| Vietnam is the world leader in both export volume and quality of Robusta coffee. |
On the other hand, Vietnam has finished its harvest and will not have the next harvest until October 2024. In addition, hot and dry weather will also affect the yield and quality of the upcoming coffee crop.
Coffee farmers and buyers are holding very little inventory, indicating a tight supply, the chairman of the Vietnam Coffee Association said. Some coffee importers are concerned that unfavorable weather conditions in Vietnam and a lack of irrigation water could also impact the next crop of green beans. The tight supply of Robusta is also driving demand for higher-quality Arabica beans.
Chairman of the Board of Directors of Phuc Sinh Joint Stock Company commented: “Although most coffee buyers around the world prefer Vietnamese Robusta coffee to Brazilian Robusta conilon coffee, with the current situation of high prices and difficulty in purchasing, large coffee roasting businesses in the world have partially switched to Brazil.”
According to Vicofa Chairman Nguyen Nam Hai, when customers in other countries are familiar with the taste of Vietnam's Robusta coffee, it is not easy to switch to other sources. However, if coffee prices remain high for a long time, customers will be forced to replace supplies from Brazil or Indonesia.
According to analysts, the increase in world coffee prices is due to increased demand from roasters in Europe but insufficient supply; at the same time, the El Nino situation that has lasted from 2023 to now, hot weather leading to drought has severely affected the productivity and output of world coffee.
Domestically, the sharp increase in coffee bean prices is affecting many export processing enterprises, especially those that have signed long-term contracts with partners (at a time when prices were still low).
The reason is that domestic raw coffee prices have been increasing continuously because they have been out of stock since around June 2023, leading to a shortage of supply for processing factories from that time until this season.
This season, according to some information, output has continued to decrease by about 20% due to prolonged heat and drought in the Southeast and Central Highlands.
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