Coffee prices also increased due to concerns that drier than normal conditions could adversely affect coffee plants in Brazil and Vietnam. This is still old information from the beginning of the week, but in the context of the situation not improving, this is still a factor pushing prices up on the two exchanges.
Coffee price today 7/12/2024
World coffee prices increased again after a strong correction session.
Domestic coffee prices fluctuate between 125,600 - 126,200 VND/kg while goods in the market have run out.
The coffee market has been reversing direction since the beginning of the week. In the last session, coffee exchanges were positively affected by the news that US inflation cooled down sharply in June, which may cause the US Federal Reserve (Fed) to soon cut interest rates.
The Wall Street Journal said that after the latest CPI report, the possibility of the US Federal Reserve (Fed) cutting interest rates in September has increased. The US central bank is keeping interest rates in the range of 5.25 - 5.5%, the highest in more than 22 years.
Market developments show that most of the major investors in the market have liquidated small long positions in the past time. It is worth noting that the liquidation time of these components was carried out during the winter season in Brazil, along with unfavorable news about the season in other countries, which helped them liquidate their long positions at all-time high prices.
In fact, the market situation is not good enough to lower coffee prices, and even the possibility of prices rising is still more likely. Information from the domestic Brazil harvest is currently in progress, likely lower than initially forecast; with the caveat that this largest coffee producing country has enough financial capacity to hold its stocks. While Brazil, Colombia, Peru, Indonesia, Uganda and smaller producers in East and Central Africa are currently harvesting to supply the 2024/25 coffee crop. The main harvests from Colombia, Central America, Mexico, Vietnam, India, China are all set to start in the fourth quarter.
The robusta coffee market has been on a strong bull run over the past 18 months as major producers like Vietnam struggle to meet rapidly growing demand.
Certified and graded arabica coffee stocks held on the New York market fell by 5,330 bags yesterday to 803,319 bags. Robusta stocks also rose to a one-year high of 6,057 lots.
The overall balance between supply and demand is tilted towards a more widely accepted view that weather fluctuations or any other unforeseen climate events, especially in major producing countries such as Brazil, Vietnam, Colombia and Indonesia, which produce an average of 120 million bags and export an average of 80 million bags of coffee to consumer markets, will be closely monitored ahead of the next coffee production cycle in 2025/26.
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| Domestic coffee prices on July 11 decreased by VND1,500/kg in some key purchasing localities. (Source: YouTube) |
According to the World & Vietnam, at the end of the trading session on July 11, the price of robusta coffee on the ICE Futures Europe London exchange continued to increase sharply, the delivery term for September 2024 increased by 99 USD, trading at 4,576 USD/ton. The delivery term for November 2024 increased by 86 USD, trading at 4,397 USD/ton. Trading volume was low.
Arabica coffee prices on the ICE Futures US New York exchange continued to increase, with the September 2024 delivery term up 1.3 cents, trading at 244.85 cents/lb. Meanwhile, the December 2024 delivery term increased 1.4 cents, trading at 242.65 cents/lb. Trading volume was high.
Domestic coffee prices on July 11 decreased by VND1,500/kg in some key purchasing localities. Unit: VND/kg
(Source: giacaphe.com) |
The Vietnam Commodity Exchange (MXV) has just proposed two coffee price scenarios in the context that La Nina is expected to replace El Nino by the end of this year in Vietnam.
Scenario 1: La Nina replaces El Nino later this year, promoting frequent storms and floods in the Central Highlands. The weather scenario in 2022 is likely to repeat itself.
La Nina will directly affect Vietnam’s coffee supply in the 2024-2025 crop, making the supply deficit more serious. With this scenario, MXV predicts that the price of green coffee beans in Vietnam will skyrocket and surpass the historical peak set in April.
Second scenario: La Nina still replaces El Nino but without storms and floods that hinder farmers’ harvesting activities. In this context, Vietnam’s 2024-2025 coffee output does not go in a more negative direction than the current one.
However, the market is still concerned about weather changes, combined with output that has been forecast to be low, causing a shortage of supply and this will be a factor supporting prices.
With this scenario, MXV predicts that coffee prices at the end of the year will remain high but will not be able to surpass the historical peak of nearly 135,000 VND/kg.
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