Coffee prices fluctuate erratically, the Fed will continue to raise interest rates, supply and demand factors will push prices up

In May 2023, Robusta and Arabica coffee prices fluctuated erratically. Robusta coffee futures prices increased, while Arabica coffee prices decreased amid heightened risk concerns. It is likely that the Fed will continue to raise interest rates at the upcoming monetary policy meeting.

World coffee prices fell sharply in the last session of the week on both London and New York exchanges. To summarize this week, the price of robusta coffee futures for July delivery increased by 1 USD. The price of arabica coffee futures for July delivery decreased by 1.3 cents. Domestic coffee prices increased by an average of 100 - 200 VND/kg.

Coffee futures prices reversed and fell over the weekend as the USDX rose sharply again, attracting speculative capital to stock exchanges, crude oil and many other commodities, causing coffee and gold prices to fall.

In addition, the increase in the exchange rate of the Brazilian Real against the USD has helped Brazilian coffee growers increase coffee export sales, putting pressure on Arabica coffee prices, according to the latest report of the Import-Export Department, Ministry of Industry and Trade .

Giá cà phê hôm nay 17/11: (Nguồn: Coffeeam)

Domestic coffee prices today (June 5) remained stable in some key purchasing localities. (Source: Coffeeam)

At the end of last week's trading session on the international floor (June 3), the price of robusta coffee on the ICE Futures Europe London continued to decrease. The price of robusta coffee futures for delivery in July 2023 decreased by 30 USD, trading at 2,575 USD/ton. The price of delivery in September decreased by 25 USD, trading at 2,542 USD/ton. Trading volume was above average.

Arabica coffee prices on the ICE Futures US New York exchange decreased. The July 2023 delivery contract decreased by 2.75 cents, trading at 180.30 cents/lb. Meanwhile, the September 2023 delivery contract decreased by 2.55 cents, to 177.70 cents/lb. Trading volume increased sharply.

Domestic coffee prices today (June 5) remained stable in some key purchasing localities.

Average price	Change
USD/VND exchange rate	23,300	+20
DAK LAK	61,200	0
LAM DONG	60,700	0
GIA LAI	61,000	0
DAK NONG	61,300	0

Unit: VND/kg.

(Source: Giacaphe.com)

According to observers, the increase in the value of the greenback has caused emerging currencies to depreciate, stimulating funds and coffee speculators to liquidate and take profits after previously buying heavily. However, in the long term, supply and demand factors will be the factors that push coffee prices to continue to rise.

In April 2023, domestic coffee prices increased by an average of VND2,600 - 2,800/kg; in March 2023, they increased by an average of VND1,400 - 1,500/kg. Thus, the domestic market has been continuously increasing since the beginning of the year.

The main reason for this situation is the scarcity of supply in the Vietnamese market. However, the upward trend has slowed down.

Arabica coffee output in the 2023/2024 crop year is forecast to increase by 1.47% compared to the 2022-2023 crop year, to 55.16 million bags (including 34.87 million bags of Arabica coffee and 20.29 million bags of Robusta coffee).

In the coming time, Robusta coffee prices are forecasted to increase, Arabica coffee prices will decrease. Robusta coffee supply from Vietnam will decrease by 10-15%/year due to unfavorable weather.

Meanwhile, global demand for robusta coffee remains high for the instant coffee industry, while pressure from the newly harvested arabica crop in Brazil continues to weigh on arabica coffee trading sentiment on the New York futures market.

The first 6-month report on coffee products of the US Department of Agriculture (USDA) shows that the output of high-quality wet-processed Arabica coffee in traditional producing countries in the Central and South American region this year will have a very significant improvement.

Source