Coffee prices continue to rise, EU market increases purchases from Vietnamese supply

The EU increased coffee imports from Vietnam in the first 6 months of 2023, up 21% in volume and 18.1% in value compared to the same period last year, reaching 389,900 tons, worth 854.23 million EUR (equivalent to 914.11 million USD), according to Eurostat.

World coffee prices are still on an upward trend as the DXY index has slightly decreased, supporting emerging currencies to increase purchasing power. Meanwhile, although inventories on ICE exchanges in both London and New York have been added, the volume is insignificant, so it cannot reduce concerns about coffee shortages in the consumption market in the short and medium term.

In the financial market, expectations that the US Federal Reserve (Fed) will stop raising USD interest rates at its executive meeting in the middle of this week and signals signaling the end of the recession cycle also contributed to supporting the upward price trend.

According to ICE – London’s report yesterday, Monday, September 18, Robusta inventories increased by 50 tons, or 0.13% compared to the previous day, to 38,680 tons (about 644,667 bags, 60 kg bags), marking a continuous increase since the beginning of September, mainly due to coffee originating from Brazil being brought to the auction floor. The increase is expected to be maintained when Brazil has just finished harvesting the Conilon Robusta crop, which is considered a good crop.

Giá cà phê hôm nay 3/2: Tiếp tục tăng mạnh. (Nguồn: Newtimes)

Domestic coffee prices today September 19 increased by 300-400 VND/kg in some key purchasing localities. (Source: Newtimes)

At the end of the first trading session of the week (September 18), coffee prices on international exchanges increased slightly. Robusta coffee prices on the ICE Futures Europe London exchange for November 2023 delivery increased by 10 USD, trading at 2,566 USD/ton. The January 2024 delivery increased by 39 USD, trading at 2,443 USD/ton. Trading volume increased.

Arabica coffee prices on the ICE Futures US New York exchange for December 2023 delivery increased by 0.45 cents, trading at 159.6 cents/lb. Meanwhile, the March 2024 delivery price increased by 0.8 cents, trading at 160.55 cents/lb. Trading volume increased sharply.

Domestic coffee prices today September 19 increased by 300-400 VND/kg in some key purchasing localities.

Average price	Change
USD/VND exchange rate	24,160	+ 75
DAK LAK	68,200	+ 300
LAM DONG	67,600	+ 400
GIA LAI	68,000	+ 400
DAK NONG	68,500	+ 300

Unit: VND/kg.

(Source: Giacaphe.com)

In the financial market, this time a series of central banks will have new decisions on interest rates. It is expected that there will be some changes in financial policy that will affect the commodity market in general, including coffee.

Last week, the European Central Bank (ECB) raised the Euro interest rate by 0.25% to an all-time high of 4%/year. The Brazilian Monetary Policy Committee (Copom) began a two-day meeting (19-20/9) to consider cutting the Real interest rate by about 0.5% from the current level of 13.75%/year. This weekend, the Bank of Japan (BoJ) and the People's Bank of China (PBoC) will also decide on new interest rates.

In the coffee market, many opinions say that the futures markets are entering a down cycle due to new crop selling pressure from Brazil - the leading coffee producer and exporter that has just completed harvesting this year's new crop and from Vietnam, the world's second largest coffee producer that is on the verge of a new harvest.

However, rumors that Indonesia has temporarily suspended deliveries to prioritize domestic industry, while Vietnam is running out of domestic goods, causing domestic prices to rise to “unprecedented” highs, have contributed to supporting a strong recovery in London futures prices.

In terms of market, Vietnam's coffee market share in the EU's total imports from extra-bloc markets increased from 20.96% in the first 6 months of 2022 to 27.5% in the first 6 months of 2023.

Brazil was the largest supplier of coffee outside the EU in the first half of 2023, reaching 440,290 tonnes, worth nearly EUR 1.67 billion (equivalent to USD 1.78 billion), down 18.9% in volume and 21% in value compared to the same period last year. Brazil's share of total EU coffee imports from the outside market decreased from 35.33% in the first half of 2022 to 31.06% in the first half of 2023.

In the first 6 months of 2023, the average import price of EU coffee from non-EU markets reached 3,813 EUR/ton, down 5.3% compared to the same period last year. In particular, the average import price of EU coffee from most non-EU markets decreased, except for Uganda, India, and Peru.

Source