Coffee prices stopped increasing sharply, falling by 3 digits simultaneously, what's happening?

The current coffee craze may be due to the Chinese market's increased purchases. Under a new agreement, Chinese coffee company Luckin Coffee will buy up to 240,000 tons of coffee per year from Brazilian suppliers between 2025 and 2029. This is the largest coffee bean purchase plan in Luckin Coffee's history.

Coffee price today 11/30/2024

World coffee prices fell by triple digits in the last trading session of the week, after many days of continuous strong increases. After 7 consecutive sessions of increase, Arabica prices reached their highest level in nearly half a century.

Domestic coffee prices are currently trading at around 130,700 - 131,500 VND/kg. Although it is in the middle of the harvest season, domestic coffee prices are still skyrocketing as on international trading floors, Robusta and Arabica coffee prices are continuously setting new records. Not only is the harvest good, but prices are also skyrocketing, domestic coffee prices are heading straight for the historic milestone of 135,000 VND/kg, 2 - 3 times higher than previous years.

According to analysis by experts and businesses, coffee prices have fluctuated strongly recently due to many factors: Concerns about limited supply due to climate change, such as weather, especially climate change in Brazil, political tensions in many places; the strengthening of the US dollar; the economic and financial policies of US President-elect Donald Trump are part of the cause and especially the European anti-deforestation regulations (EUDR) have not yet had a final decision.

But perhaps the market is most concerned about the EU's anti-deforestation regulations. Europe is one of the world's largest coffee consuming markets, so the EUDR will have a big impact on coffee prices in the coming time.

Although the European Parliament recently agreed to the proposal to postpone the application for another 12 months, it is not the EU's final decision. "The final decision will be made in December; if the EU still applies the EUDR from December 30, 2024, coffee prices will increase sharply. If it is postponed for another 12 months as recently proposed, prices may cool down. If applied, Vietnam will be the country that benefits the most in the EU market. Because we are the most active country in complying with this regulation.

Consulting firm StoneX forecasts Brazil’s coffee output in the 2025-2026 crop year to fall 0.4% from the current crop, largely due to a decline in arabica coffee due to prolonged drought during the crucial flowering stage. This would bring the South American country’s next arabica coffee output down 10.5% from the previous crop year, to 40 million 60-kg bags.

Domestic coffee prices on November 29 continued to increase sharply by 3,000 - 3,300 VND/kg in some key purchasing localities. (Source: YouTube)

According to World & Vietnam , at the end of this weekend's trading session (November 29), the price of robusta coffee on the ICE Futures Europe London exchange turned sharply down, the delivery term for January 2025 decreased by 156 USD, trading at 5,409 USD/ton. The delivery term for March 2025 decreased by 151 USD, trading at 5,377 USD/ton. Average trading volume.

Arabica coffee prices on the ICE Futures US New York exchange reversed, with the March 2025 delivery term down 5 cents, trading at 318.05 cents/lb. Meanwhile, the May 2025 delivery term down 5.2 cents, trading at 310.50 cents/lb. Trading volume was high.

Domestic coffee prices on November 29 continued to increase sharply by 3,000 - 3,300 VND/kg in some key purchasing localities. Unit: VND/kg

Average price	Medium
USD/VND exchange rate	25,145	- 25
DAK LAK	131,000	+ 3,000
LAM DONG	130,700	+ 3,200
GIA LAI	131,000	+ 3,100
DAK NONG	131,500	+ 3,300

(Source: giacaphe.com)

The representative of the Vietnam Coffee-Cocoa Association (Vicofa) also had to exclaim, "The price is too high. I really don't understand it. It's unprecedented in history." The unusual developments in the domestic coffee market are said to have many causes, but the basic reason is that supply is smaller than demand.

The supply shortage is real. The amount of coffee in stock on international exchanges is not much. It can be seen that the origin is the continuous increase in the price of Arabica coffee on the New York floor. Because this market is worried about the shortage of supply from Brazil, due to the prolonged drought in many growing areas. Besides, there are the macro policies of the new government.

The fever from the New York floor spread to the London floor. As prices rose, coffee farmers limited their sales, causing a serious shortage.

The coffee price fever on international exchanges has pushed coffee prices in the Central Highlands provinces to suddenly increase by about VND10,000/kg compared to last week. The sharp increase in world prices in recent days has led to a sharp increase in domestic prices. Compared to the same period last year, the current price is at least 2.5 times higher. This is an unprecedented high price during the coffee harvest season in Vietnam.

In addition, according to industry experts, in recent years, thanks to the application of integrated pest management (IPM) farming and increased use of organic and biological fertilizers, the plants are healthy and disease-free, helping to reduce investment costs while the yield remains stable at over 4 tons/ha. Meanwhile, although coffee is in season and has good prices, many farmers are in no hurry to sell. Because previously, intercropping crops such as pepper also had good prices, many people are not under economic pressure to sell young coffee as before.

Explaining the price increase, industry insiders also said that the severe drought at the beginning of the year and the prolonged rains at the end of the year caused the harvest to come 2-3 weeks later than the average of many years. At present, the harvested area is only about 10-20%. Because they are not worried about the price falling like in previous years, many people are not in a hurry to harvest early but instead wait for the coffee to ripen before picking, drying and storing.

In addition, because coffee is now of high value, people do not consign it to agents as before but store it at home, and even households with money buy more from neighboring households to store, so the amount of goods traded on the market is very small. Vietnam's supply has no goods to deliver, causing world prices to skyrocket and vice versa.

Source: https://baoquocte.vn/gia-ca-phe-hom-nay-30112024-gia-ca-phe-ngat-da-tang-manh-giam-dong-loat-3-con-so-chuyen-gi-dang-xay-ra-295604.html