Arabica coffee prices continue to rise, robusta reverses; target of Vietnamese specialty products

In the international market, the US Department of Agriculture (USDA) forecasts that world coffee exports will decrease by 3 million bags (one bag of 60 kg) in the 2022-2023 crop year, down to more than 116 million bags. Meanwhile, the International Coffee Organization (ICO) maintains its forecast at over 167 million bags, down only 2.1% from the previous crop.

World coffee prices are mixed, robusta coffee has turned down, arabica coffee has continued to increase, when the supply situation seems to have a great impact on market prices,

ICE – London inventory report on September 19 was significantly supplemented, adding 1,390 tons, an increase of 3.59% compared to the previous day, to 40,070 tons (equivalent to 667,833 bags, 60 kg bags).

Meanwhile, Arabica coffee prices in New York have been supported by weather concerns in Brazil. High temperatures are forecast in the next few days, which will cause some concerns about the coffee tree flowering and pollination process, affecting next year's harvest yield.

Financial markets are reflecting a cautious mood, awaiting decisions from the Brazilian Monetary Policy Committee (Copom) and the US Federal Reserve (Fed) and the Bank of England (BoE) on September 20 and 21.

Giá cà phê hôm nay 3/2: Tiếp tục tăng mạnh. (Nguồn: Newtimes)

Domestic coffee prices today September 20 down 300-400 VND/kg in some key purchasing localities. (Source: Newtimes)

At the end of the trading session on September 19, coffee prices on international exchanges reversed. Robusta coffee prices on the ICE Futures Europe London exchange for November 2023 delivery decreased by 26 USD, trading at 2,540 USD/ton. The January 2024 delivery decreased by 13, trading at 2,430 USD/ton. Trading volume was high on average.

Arabica coffee prices on the ICE Futures US New York exchange for December 2023 delivery increased by 1.35 cents, trading at 160.95 cents/lb. Meanwhile, the March 2024 delivery price increased by 1.4 cents, trading at 162.55 cents/lb. Trading volume increased sharply.

Domestic coffee prices today September 20 down 300-400 VND/kg in some key purchasing localities.

Average price	Change
USD/VND exchange rate	24,205	+0
DAK LAK	67,900	- 300
LAM DONG	67,300	- 300
GIA LAI	67,700	- 300
DAK NONG	68,100	- 400

Unit: VND/kg.

(Source: Giacaphe.com)

2023 is the year that green coffee has the highest export price in many years, but the amount of coffee in the people as well as in businesses has run out.

According to information from the Vietnam Coffee and Cocoa Association, the amount of coffee exported from August and September is decreasing compared to the same period last year and is forecast to continue to decrease. Currently, the coffee season is at the end, so even if businesses want to buy, there is no product.

According to experts, there are two main reasons for the increase in export coffee prices on a macro level. Firstly, the US inflation report has slowed down and speculation that the US Federal Reserve (Fed) may temporarily stop raising interest rates. This is the factor that encourages funds and speculators to return to the market to buy after having liquidated heavily in the previous two consecutive weeks.

Second, funds and speculators buy heavily when financial factors are more positive. In addition, the shortage of supply is one of the reasons for the increase in export coffee prices.

Asia is not the only region growing a preference for robusta. “While the decline in processed arabica imports is partly due to lower supplies, the shift to robusta suggests that cheaper coffee is gaining traction in the European market,” said Natalia Gandolphi, an analyst at HedgePoint Global Markets Intelligence. She expects a deficit of 4.16 million bags of robusta between October 2023 and September 2024.

To ensure that coffee prices remain high, the Ministry of Agriculture and Rural Development has approved the “Project for Developing Vietnam's Specialty Coffee for the 2021-2030 period” with the goal of reaching a specialty coffee area of 2% of the total area by 2025, meaning an output of 5,000 tons and increasing to 3% and 11,000 tons respectively in 2030.

Source