Will coffee prices reach new highs and continue to surge?

The forecast for domestic coffee prices on May 24, 2024, is for continued upward movement as the market experiences significant volatility. A range of complex factors, including weather patterns, production forecasts, export trends, and inventory levels, are all influencing coffee prices.

Volcafe, a coffee trading firm, has just announced that Vietnam's Robusta coffee production in the 2024/25 crop year may only reach 24 million bags, the lowest level in 13 years, due to a lack of rain causing "irreparable damage".

Volcafe also forecasts that the global Robusta coffee deficit will be 4.6 million bags in the 2024/25 crop year. Although this figure is smaller than the 9 million bag deficit in the 2023/24 crop year, it marks the fourth consecutive year of Robusta coffee deficit.

One of these is the increased use of coffee as a natural energy source in the morning, leading to higher demand. If this trend continues, it could lead to further increases in coffee prices. This will be a key point that commodity traders will want to note in 2024.

In addition, according to market forecasts, world coffee prices on May 24, 2024, unexpectedly reversed course and fell sharply on online trading platforms. Mr. Trinh Duc Minh, Chairman of the Buon Ma Thuot Coffee Association (Dak Lak province), pointed out four reasons for the cooling down of world coffee prices.

Firstly, when the May delivery deadline expires and the July deadline arrives, those holding inventory often push prices down aggressively. Secondly, the weakening Brazilian Real (BRL) against the US dollar has encouraged coffee exporters from the world's number one coffee supplier to increase their exports.

Third, news of early seasonal rains in coffee-growing regions of Vietnam and Brazil has somewhat eased concerns about a severe crop failure in the upcoming season. Fourth, information about higher-than-normal stock levels on the exchange has reduced worries about a coffee shortage.

Domestic coffee prices have surged.

Domestic coffee prices today, May 23, 2024, increased by 4,000 to 4,600 VND/kg. Currently, the average purchase price in the Central Highlands provinces is 110,100 VND/kg, with the highest purchase price in Dak Nong province at 110,400 VND/kg.

Specifically, the purchase price of coffee in Gia Lai and Kon Tum provinces is 109,800 VND/kg; in Dak Nong province, coffee is purchased at the highest price of 110,400 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 109,000 VND/kg.

Today's coffee prices in Dak Lak province are as follows: in Cu M'gar district, coffee is being purchased at approximately 109,900 VND/kg, while in Ea H'leo district and Buon Ho town, it is being purchased at the same rate of 110,000 VND/kg.

World coffee prices unexpectedly fall.

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

In addition, today's online coffee prices on the three coffee exchanges unexpectedly declined. As of 8:40 PM on May 23, 2024 (Vietnam time) on the London exchange, Robusta coffee prices reversed course and fell across all contract periods, fluctuating between 3523 and 3822 USD/ton.

Specifically, the price of Robusta coffee futures contracts for July 2024 delivery on the London exchange was $3822/ton, a decrease of $95/ton compared to the beginning of the trading session. The September 2024 contract was $3732/ton, down $112; the November 2024 contract was $3646/ton, down $92; and the January 2025 contract was $3523/ton, down $109.

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

Similarly, Arabica coffee prices on the New York exchange today, at 8:40 PM on May 23, 2024, fell sharply across all maturities, fluctuating between 212.55 and 215.50 cents/lb.

Specifically, the July 2024 delivery contract was 215.50 cents/lb, down 4.95 cents/lb from the start of the session. The September 2024 contract was 214.50 cents/lb, down 4.75 cents/lb; the December 2024 contract was 213.20 cents/lb, down 4.70 cents/lb; and the March 2025 contract was 212.55 cents/lb, down 4.30 cents/lb.

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

Brazilian Arabica coffee prices at 8:40 PM on May 23, 2024 showed mixed increases and decreases across different contract periods compared to the beginning of the session, fluctuating between 262.70 and 276.15 USD/ton.

Specifically, the May 2024 delivery contract was $276.15/ton, up $4.30. The July 2024 delivery contract was $262.40/ton, down $4.45 from the start of trading; the September 2024 delivery contract was $260.00/ton, down $4.45; and the March 2025 delivery contract was $262.70/ton, up $4.15.

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 19:00 to 02:35 (the next day), Vietnam time.

Rabobank forecasts a coffee surplus of 4.5 million bags for the upcoming 2024/25 marketing year, a sharp increase from the 500,000-bag surplus projected for 2023/24. On the optimistic side, Rabobank has lowered its 2023/24 production forecast by 3.9 million bags to 171.1 million bags, primarily due to downward revisions in production from Indonesia and Honduras.

The USDA's Foreign Agricultural Service (FAS) forecasts that ending stocks for the 2023/24 crop year will decrease by 4.0% to 26.5 million bags from 27.6 million bags in the 2022-23 crop year. The USDA FAS predicts that Brazil's arabica coffee production in the 2023/24 crop year will increase by 12.8% year-on-year to 44.9 million bags due to higher yields and increased planted area. The USDA FAS also forecasts that Colombia's coffee production in the 2023/24 crop year, the world's second-largest arabica coffee producer, will increase by 7.5% year-on-year to 11.5 million bags.

Source: https://congthuong.vn/du-bao-gia-ca-phe-ngay-2452024-gia-ca-phe-con-lap-dinh-tang-vun-vut-321960.html