World coffee prices fluctuated violently over the weekend, reversing and falling immediately after a rare strong increase. This fluctuation was not unexpected - a decline after an overheated increase. In particular, concerns about supply shortages pushed the price of Robusta futures for immediate delivery to skyrocket.
At the end of the trading session on June 9, the price of robusta coffee on the ICE Futures Europe London exchange turned down. The price of robusta coffee futures for July 2023 delivery decreased by 32 USD, trading at 2,728 USD/ton. The price of September delivery decreased by 24 USD, trading at 2,702 USD/ton. Trading volume increased.
Arabica coffee prices on the ICE Futures US New York floor also decreased. The July 2023 delivery period decreased by 4.2 cents, trading at 190.65 cents/lb. Meanwhile, the September 2023 delivery period decreased by 3.7 cents, to 186.65 cents/lb. Trading volume increased sharply.
The price of green coffee purchased in the Vietnamese market has exceeded 65,000 VND/kg - an all-time record. This price has made it impossible for roasters to buy goods.
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| Domestic coffee prices fell by 300 - 400 VND/kg in some key purchasing localities during the weekend trading session (June 10). (Source: ohman.vn) |
Robusta coffee futures in London have broken through $2,800 a tonne, a 15-year high, on supply concerns as more forecasts have come in that Brazil’s current robusta crop is falling short of expectations. The US Department of Agriculture ’s (USDA) FAS report has revised down its forecast for Conilon robusta production to 21.7 million bags, down 5% from the previous season’s estimate of 22.8 million bags.
Meanwhile, spot demand and buying by funds and speculators remain strong, supported by the US dollar, which is currently losing value against emerging currencies. Wall Street investors continue to pour money into the stock and commodity markets in general. Fund buying has also driven up coffee prices, as the onset of the El Nino weather phenomenon could reduce global coffee production.
Domestic coffee prices decreased by 300 - 400 VND/kg in some key purchasing localities during the weekend trading session (June 10).
Unit: VND/kg. (Source: Giacaphe.com) |
The International Coffee Organization (ICO) forecasts that world coffee consumption will exceed supply by 7.3 million bags this season, up from a deficit of 7.1 million bags last season. The world’s largest producers of robusta beans, Brazil and Vietnam, are being hit by climate change, leading to a decline in output.
Coffee prices continue to rise sharply as concerns grow that El Nino could threaten supplies. El Nino is forecast to bring localized droughts to coffee-growing countries around the Pacific Rim later this year, while bringing heavy rains to key coffee growing regions in southeastern Brazil and further west Africa.
The global consumer market’s demand for bitter, cheap coffee is increasing due to economic difficulties. This has supported the growth of Vietnamese robusta coffee in recent times.
In just the first 5 months of the year, Vietnam's coffee export turnover has exceeded 2 billion USD to set a new record. Specifically, according to the Center for Digital Transformation and Agricultural Statistics (Ministry of Agriculture and Rural Development), the country's coffee export in May is estimated at 165,000 tons with a value of 396 million USD, bringing the total volume and value of coffee exports in the first 5 months of the year to 882,000 tons with a value of 2.02 billion USD, down 2.2% in volume but up 0.2% in value compared to the same period last year.
The Vietnam Coffee and Cocoa Association (VICOFA) forecasts that from now until the end of the year, coffee exports will remain favorable as demand increases while supply remains unchanged. Vietnam's coffee output is forecast to decrease by 10-15% per year this year due to unfavorable weather.
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