Could coffee prices plummet?

Coffee prices forecast for June 23, 2024 in the domestic market show a downward trend. The domestic coffee market has reversed its upward trend compared to the same time yesterday. Experts believe the reason for the decline is the strengthening US dollar.

According to some industry experts, coffee prices are likely to remain relatively stable in the coming period, unlike in recent months, but will still maintain a high level. This is due to Brazil's peak harvest season, followed by Vietnam's harvest season in October.

In early June, Robusta coffee prices in the domestic market increased compared to the end of May. According to the Ministry of Agriculture and Rural Development , the remaining coffee inventory in the domestic market is very low. It is predicted that coffee production for the upcoming crop year will continue to decrease by about 20% due to the recent prolonged heatwave leading to severe drought in the Central Highlands.

By the end of the first eight months of the 2023-2024 crop year (from October 2023 to May 2024), Vietnam had exported nearly 1.2 million tons of coffee, equivalent to 80% of the current crop year's production and a 7% decrease compared to the same period of the previous crop year.

Currently, there are no specific figures, but it is certain that the production for the 2024/2025 crop year will not be equal to the previous year. Therefore, Vietnam's coffee industry needs to prepare more defensive scenarios and better control risks in the new crop year.

According to the Ministry of Agriculture and Rural Development, Vietnam's coffee production for the 2023/2024 crop year is estimated to decrease by 20% compared to the previous year, falling to 1.47 million tons, the lowest in four years. Production for the 2024/2025 crop year is projected to continue declining due to the lingering effects of the El Nino phenomenon from the previous crop year, pest and disease outbreaks in some areas, and shrinking cultivated areas as farmers switch to other crops with higher economic benefits.

Representatives from several large green coffee bean exporting businesses in the Central Highlands region said that current inventory is only sufficient to last until June 2024 and cannot extend until the next harvest season.

Domestic coffee prices today range from 122,000 to 123,200 VND/kg. Currently, the average purchase price in the Central Highlands provinces is 123,100 VND/kg, with the highest purchase price in Dak Nong province at 123,200 VND/kg.

Specifically, the purchase price of coffee in Gia Lai province (Chu Prong) is 123,000 VND/kg, while in Pleiku and La Grai it is 122,900 VND/kg; in Kon Tum province the price is 123,000 VND/kg; and in Dak Nong province, coffee is purchased at the highest price of 123,200 VND/kg.

In Lam Dong province, in districts such as Bao Loc, Di Linh, and Lam Ha, the price of bulk green coffee beans (green coffee beans, fresh green coffee beans) is 122,000 VND/kg.

Today's coffee prices (June 22nd) in Dak Lak province are as follows: in Cu M'gar district, coffee is being purchased at approximately 123,000 VND/kg, while in Ea H'leo district and Buon Ho town, it is being purchased at the same rate of 122,900 VND/kg.

London Robusta coffee prices (Image: Screenshot from giacaphe.com)

Specifically, the price of Robusta coffee futures contracts for July 2024 delivery on the London exchange was $4,299 per ton, down $75 from the start of trading. The September 2024 contract was $4,104 per ton, down $72; the November 2024 contract was $3,933 per ton, down $68; and the January 2025 contract was $3,773 per ton, down $66.

New York Arabica coffee prices (Image: Screenshot from giacaphe.com)

Similarly, Arabica coffee prices on the New York exchange today, at 8:30 PM on June 22, 2024, decreased across all contract periods, fluctuating between 219.50 and 225.00 cents/lb.

Specifically, the September 2024 delivery contract was 225.00 cents/lb, down 5.35 cents/lb from the start of the session. The December 2024 contract was 223.25 cents/lb, down 5.30 cents/lb; the March 2024 contract was 221.65 cents/lb, down 5.35 cents/lb; and the May 2025 contract was 219.50 cents/lb, down 5.50 cents/lb.

Brazilian Arabica coffee prices (Image: Screenshot from giacaphe.com)

Brazilian Arabica coffee prices today, at 8:30 PM on June 22, 2024, showed mixed movements. Specifically, the July 2024 delivery contract was $284.25/ton, down 4.90%; the September 2024 contract was $274.35/ton (up 0.45%); the December 2024 contract was $270.70/ton (down 6.55%); and the March 2025 contract was $269.05/ton, down 7.10%.

Robusta coffee traded on the ICE Futures Europe exchange (London exchange) opens at 4:00 PM and closes at 12:30 AM (the next day), Vietnam time.

Arabica coffee on the ICE Futures US (New York exchange) opens at 4:15 PM and closes at 1:30 AM (the next day), Vietnam time.

For Arabica coffee traded on the B3 Brazil exchange, trading hours will be from 7:00 PM to 2:35 AM (the following day), Vietnam time.

Reportedly, due to the forecast that Robusta coffee supply from Vietnam will continue to be scarce in the near future, hedge funds have increased their net long positions.

According to updated data from Volcafe trading firm, due to unfavorable weather conditions, Vietnam's Robusta coffee production for the 2024/2025 crop year is estimated at 24 million bags, the lowest level in 13 years.

Furthermore, according to a report from the USDA Post (Foreign Resident Office of the U.S. Department of Agriculture), Vietnam's coffee production in the 2024/2025 crop year is projected at approximately 29 million bags (60 kg/bag), a slight decrease compared to the estimated 29.1 million bags in the 2023-2024 crop year. Of this, Robusta coffee production is expected to reach 27.85 million bags, lower than the previous crop year.

Currently, coffee farmers in Vietnam are adopting intercropping methods to diversify their crops and increase revenue, instead of completely switching to other crops. The USDA Post estimates that the total coffee acreage in Vietnam will remain stable at around 600,000 hectares in the next few years. Coffee remains an important crop in highland provinces such as Lam Dong and Dak Lak, and rising coffee prices have helped stabilize the planted area.

For countries in the Southern Hemisphere, it is currently coffee harvesting season, specifically from May to September each year. Vietnam, however, located in the Northern Hemisphere, has already finished its harvest season, which runs from October of the previous year to the end of May of the following year.

Global coffee experts predict that the price of this agricultural product will temporarily stop rising and tend to decrease due to increased harvest yields in Brazil. However, some forecasts suggest that coffee prices will continue to rise in the fourth quarter of 2024, when Brazil finishes its harvest and Vietnam begins its new harvest.

This information is for reference only. Prices may vary depending on the location.

Source: https://congthuong.vn/du-bao-gia-ca-phe-ngay-2362024-gia-ca-phe-co-the-tut-doc-327585.html