Robusta coffee prices fluctuate strongly, Arabica recovers; demand is increasing while supply is tightening

The US Department of Agriculture (USDA) forecasts that Vietnam's coffee output this year will decrease by more than 7%, which will be the lowest harvest in 4 years, causing concerns that global supply will be further tightened, in the context of increasingly high demand for robusta coffee.

World coffee prices this weekend, robusta fluctuated strongly and increased sharply on the London floor beyond all predictions, arabica recovered slightly.

At the end of the weekend trading session (July 7), robusta coffee prices on the ICE Futures Europe London exchange increased sharply. Robusta coffee futures for September 2023 delivery increased by 111 USD, trading at 2,621 USD/ton. November delivery futures increased by 69 USD, trading at 2,475 USD/ton. Average trading volume was high.

The price of Arabica coffee on the ICE Futures US New York exchange for September 2023 delivery continued to adjust slightly, increasing by 0.45 cents, trading at 160.9 cents/lb. Meanwhile, the December 2023 delivery increased by 0.4 cents, trading at 160.05 cents/lb. Trading volume increased.

Giá cà phê hôm nay 21/6: Robusta khó tăng, ICO duy trì dự báo thâm hụt khoảng 3,1 triệu bao, cà phê Việt 'thắng lớn'. (Nguồn: praguemonitor)

Domestic coffee prices increased sharply by 1,800 - 1,900 VND/kg in some key purchasing localities during the weekend session (July 8). (Source: praguemonitor)

The inventory level managed by ICE – London has been receiving “bad news” continuously, falling continuously, down to 62,130 tons on July 6, and on July 7 it fell another 2,250 tons to 59,880 tons. Experts say that reports of sharp declines in ICE inventory are sometimes an opportunity for speculators to push futures prices up to make a profit due to concerns about supply shortages.

Domestic coffee prices increased sharply by 1,800 - 1,900 VND/kg in some key purchasing localities during the weekend session (July 8).

Average price	Change
USD/VND exchange rate	23,470	0
DAK LAK	66,700	+ 1,900
LAM DONG	66,300	+ 1,800
GIA LAI	66,400	+ 1,800
DAK NONG	66,800	+ 1,800

Unit: VND/kg.

(Source: Giacaphe.com)

Shortage of supply in Vietnam, the world's largest robusta grower, is seen as the main driver for the recent sharp increase in prices.

According to Bloomberg , the US Climate Prediction Center has confirmed that the extreme weather phenomenon El Niño (hot and dry weather) has returned, with the level forecast to be from moderate to strong. This threatens the supply of major coffee growing areas such as Vietnam and Indonesia.

Supply is decreasing, meanwhile, the economic recession has caused consumer demand to switch to using robusta beans to blend with arabica or completely replace arabica because of increasingly high prices.

In addition, the cost of planting has also been pushed up in recent times due to the increase in fertilizer and gasoline prices. The combination of these factors has caused coffee prices to set a record in recent times. Traders believe that at present, coffee prices will remain high and show no signs of going down. Although prices have been increasing continuously, exporters and farmers have not benefited much. For farmers, they have sold out their goods in advance. As for exporters, due to high financial costs, they do not have the capital to import goods in the previous stage.

Source