Will coffee prices continue to surge dramatically?

Coffee prices in the domestic market are forecast to continue rising sharply on June 22, 2024. Hot and dry weather in Vietnam is also raising concerns about the next harvest in the world's largest exporter of Robusta coffee, a type of coffee used in instant coffee. Maxar reports that Vietnam is expecting scattered showers in the coming days, indicating that rainfall so far in June has been insufficient.

Vietnam's coffee supply is dwindling while the outlook for the next crop is not very promising. The Import-Export Department ( Ministry of Industry and Trade ) recently predicted that coffee prices will rise again, mainly due to increased investor concerns about the supply prospects from Vietnam.

Currently, hedge funds have increased their net long positions, anticipating that the supply of Robusta from Vietnam will continue to be scarce in the near future.

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

According to a report by the U.S. Department of Agriculture (USDA) Postal Service, 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 of the 2023-2024 crop year. Of this, robusta coffee production is expected to reach 27.85 million bags, lower than the 28 million bags of the previous crop year. Meanwhile, arabica production is projected to increase slightly to 1.15 million bags.

Vietnam's estimated coffee production for the 2023-2024 crop year has been revised upwards by 6% to 29.1 million bags. Higher coffee prices in the 2023-2024 crop year encourage farmers to increase investment in production to reduce harvest losses as well as other input costs.

Instead of completely switching to other crops, coffee farmers are now adopting intercropping methods to diversify and increase revenue. The USDA Post estimates that the total coffee acreage in Vietnam will remain stable at around 600,000 hectares for the next few years. Farmers can earn twice as much from growing durian compared to growing coffee. However, rising coffee prices have helped stabilize coffee acreage, and it remains an important crop in highland provinces like Lam Dong and Dak Lak.

Domestic coffee prices, updated at 4:30 AM on June 21, 2024, according to www.giacaphe.com, are in the range of 120,000-121,000 VND/kg. The average purchase price in the Central Highlands provinces is currently 121,100 VND/kg, with the highest price in Dak Nong province at 121,200 VND/kg.

Specifically, the purchase price of coffee in Gia Lai province (Chu Prong) is 121,000 VND, in Pleiku and La Grai it is 120,900 VND/kg; in Kon Tum province the price is 121,000 VND/kg; in Dak Nong province the coffee is purchased at the highest price of 121,200 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 coffee beans) is 120,000 VND/kg.

Today's coffee prices (June 21st) in Dak Lak province are as follows: in Cu M'gar district, coffee is being purchased at approximately 121,000 VND/kg, while in Ea H'leo district and Buon Ho town, it is being purchased at the same rate of 120,900 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 $4,341 per ton, down $33 from the start of trading. The September 2024 contract was $4,159 per ton, down $17; the November 2024 contract was $3,998 per ton, down $3; and the January 2025 contract was $3,856 per ton, up $17.

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 21, 2024, decreased across all contract periods, fluctuating between 222.95 and 229.20 cents/lb.

Specifically, the September 2024 delivery contract was 229.20 cents/lb, down 71.15 cents/lb from the start of the session. The December 2024 contract was 226.95 cents/lb, down 160 cents/lb; the March 2024 contract was 225.15 cents/lb, down 1.85 cents/lb; and the May 2025 contract was 222.95 cents/lb, down 2.05 cents/lb.

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

Brazilian Arabica coffee prices today, at 8:30 PM on June 21, 2024, showed mixed movements. Specifically, the July 2024 delivery contract was $289.15/ton, up 5.25%; the September 2024 contract was $280.40/ton (down 0.20%); the December 2024 contract was $276.50/ton (down 0.75%); and the March 2025 contract was $276.15/ton, up 4.35%.

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.

Currently, countries in the Southern Hemisphere are harvesting coffee (from May to September each year), while Vietnam, located in the Northern Hemisphere, has finished its harvest season (from October of the previous year to the end of May of the following year).

Global analyses suggest 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 indicate that coffee prices will continue to rise in the fourth quarter of 2024, as Brazil finishes its harvest and Vietnam begins its new harvest.

According to Volcafe, Vietnam's Robusta coffee production for the 2024-2025 crop year is estimated at 24 million bags, the lowest level in the past 13 years, due to unfavorable weather conditions. This information caused Robusta prices on the London exchange to surge earlier this week.

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

Source: https://congthuong.vn/du-bao-gia-ca-phe-ngay-2262024-gia-ca-phe-co-tiep-tuc-tang-soc-327435.html