Coffee prices continue to set new records.

The upward trend in domestic coffee prices is not over yet, as June continued to set new records. As of June 12th, domestic coffee prices were at nearly 65,000 VND/kg.

Robusta coffee production in many countries is projected to decline sharply due to the impact of El Nino. Cumulatively, in the first seven months of the 2022-2023 crop year (October 22, 2022 to April 23, 2023), global coffee exports decreased by 6.2% (4.77 million bags) compared to the same period of the previous crop year, falling to 72.2 million bags.

The latest survey shows that, as of June 10th, the price of robusta coffee for July delivery on the New York exchange reached a record high of $2,728 per ton, a 46% increase compared to the beginning of this year. Arabica coffee prices also increased, but at a lower rate, rising by about 19-20% compared to the beginning of the year, reaching 190.7 US cents per pound for the near-term contract. We believe the upward trend in robusta coffee prices will continue as Vietnam's supply dries up. We estimate Vietnam's robusta inventory is at approximately 80,000 tons.

Accordingly, the 2022-2023 crop year production is estimated at approximately 1.5 million tons, plus 100,000 tons carried over from the previous crop year, bringing the total supply to 1.6 million tons. The US Department of Agriculture (USDA) estimates that Vietnam's coffee production for the 2022-2023 crop year will decrease by 6% compared to the previous crop year, to 29.7 million bags (60 kg/bag).

The world's largest robusta coffee producer will experience its lowest harvest in four years due to higher production costs (labor, fertilizers) and farmers' tendency to switch to growing more profitable crops such as avocados, durians, and passion fruit.

The upward trend in domestic coffee prices is not over yet, as June continued to set new records. As of June 12th, domestic coffee prices were at nearly 65,000 VND/kg.

Domestic coffee prices may continue to rise in the long term due to declining supply as planted areas shrink. Current coffee inventories are estimated at only around 80,000 tons, while the new crop year is still four months away and global demand for Vietnamese coffee is approximately 100,000 tons per month. Meanwhile, global demand for robusta coffee remains high.

COFFEE MARKET REPORT - MAY 2023

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