The domestic coffee price increase has not ended yet as it continued to set new records in June. As of June 12, domestic coffee prices were at nearly VND65,000/kg.
Robusta coffee production in many countries is forecast to decrease sharply due to the impact of El Nino. In the first 7 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 last year to 72.2 million bags.
The latest survey shows that as of June 10, the price of robusta coffee for July delivery on the New York Stock Exchange has reached a record of 2,728 USD/ton, up 46% compared to the beginning of this year. Arabica coffee prices have also increased but at a lower amplitude, up about 19-20% compared to the beginning of the year, reaching 190.7 US cents/pound for the near term. We believe that the upward trend in robusta coffee prices will continue as Vietnam's supply is exhausted. We estimate that Vietnam's robusta inventory is about 80,000 tons.
Accordingly, the output for the 2022-2023 crop year is about 1.5 million tons, plus 100,000 tons of overlap from the previous crop year, for a total supply of 1.6 million tons. The US Department of Agriculture (USDA) estimates that Vietnam's coffee output for the 2022-2023 crop year will decrease by 6% compared to the previous crop year, down to 29.7 million bags (60 kg/bag).
The world's largest robusta producer is set to have its lowest harvest in four years due to higher production costs (labor, fertilizer) and farmers shifting to more profitable crops such as avocado, durian and passion fruit.
The domestic coffee price increase has not ended yet as it continued to set new records in June. As of June 12, domestic coffee prices were at nearly VND65,000/kg.
The domestic coffee price increase may continue in the long term due to the decrease in supply as the area shrinks. Current coffee inventories are estimated at only about 80,000 tons, while there are still 4 months left until the new crop and the demand for Vietnamese coffee from the world is about 100,000 tons/month. Meanwhile, the world demand for Robusta coffee remains high.
COFFEE MARKET REPORT MAY 2023
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