Robusta coffee prices highest in 28 years, Brazil will have a bumper crop, what will the market be like?

The outlook for Brazil’s 2024/2025 crop is the market’s main concern at the moment. Despite the drought late last year, agronomists still believe that Brazil will have a bumper “biennial” crop by the middle of next year, which can fully meet the needs of the consumer market, so future coffee prices remain unpredictable.

World coffee prices fluctuated, robusta turned up, while arabica continued to decrease.

Domestic coffee prices continue to be adjusted up by 300 - 400 VND/kg. Currently, the highest price is 78,700 VND/kg recorded in Dak Nong province.

Global robusta coffee prices have risen to a 28-year high, while the market is still supported by transportation and delivery issues, including coffee supplies from Vietnam being disrupted during the long Lunar New Year holiday. The Red Sea "hotspot" has not only caused the Asia-Europe coffee route to be blocked, but also coffee from East Africa has been seriously affected.

The next major concern for London bulls, which is also being closely watched by the entire market during this time, is the daily report data from ICE – Europe. Meanwhile, the inventory report on February 6 on the London exchange decreased by 1,610 tons, or 5.58%, to 27,250 tons (about 454,187 bags, 60kg bags), continuing to support the futures market to return to an upward price trend.

Arabica coffee prices traded on the New York floor continued to weaken due to the selling strength from the world's leading supplier - Brazil, as the DXY index continued to decline, putting coffee prices in the domestic market of this country at a disadvantage due to the exchange rate. In addition, the phenomenon of short-term profit taking by funds and speculators on the futures floor and information about Brazil's forecasted bumper crop also supported the downward trend.

Giá cà phê hôm nay 20/3: dsjfbvs. (Nguồn: ohman.vn)

Domestic coffee prices on February 7 continued to increase by 300 - 400 VND/kg in some key purchasing localities. (Source: ohman.vn)

At the end of the trading session on February 6, the price of robusta coffee on the ICE Futures Europe London exchange increased, the delivery term in March 2024 increased by 10 USD, trading at 3,198 USD/ton. The delivery term in May 2024 increased by 28 USD, trading at 3,096 USD/ton. The average trading volume was low.

Arabica coffee prices on the ICE Futures US New York exchange continued to decline, with March 2024 delivery down 1.30 cents, trading at 188.20 cents/lb. Meanwhile, May 2024 delivery fell 1.60 cents, trading at 185.10 cents/lb. Trading volume was high on average.

Domestic coffee prices on February 7 continued to increase by 300 - 400 VND/kg in some key purchasing localities.

Average price	Medium
USD/VND exchange rate	24,160	- 20
DAK LAK	78,400	+ 400
LAM DONG	77,600	+ 400
GIA LAI	78,300	+ 400
DAK NONG	78,700	+ 300

Unit: VND/kg.

(Source: Giacaphe.com)

The DXY index rose to a three-month high after US economic indicators reports showed the world's leading economy is still growing very optimistically, as a result, long-term US Treasury yields increased by 4% after the Fed Chairman said there would be no more 6 interest rate cuts in 2024 as the market expected.

The rise in the US dollar has led to widespread liquidation by funds and speculators as prices of most commodities have become too expensive. This has caused most commodity prices to simultaneously decline.

While the fundamentals of the coffee futures markets remain unchanged, some forecasts for Brazil’s 2022/23 crop continue to be released, with most forecasts being higher than Conab’s. The latest is that consultancy and analyst Safras & Mercados has raised its estimate for Brazil’s 2022/23 coffee production to 61.1 million bags from its previous estimate of 58.9 million bags.

Meanwhile, in 2022 and 2023, Vietnam exported a record amount of coffee while its harvest decreased, so the amount of coffee available for export was low. Meanwhile, strong demand for robusta in the context of consumers tightening spending due to high interest rates and a gloomy economy, has pushed prices up even more.

The Vietnam Coffee and Cocoa Association (VICOFA) estimates that Vietnam's 2023/24 crop output will continue to decrease by another 10% compared to the previous crop. In addition, the US Department of Agriculture (USDA) forecasts that output in two other major supplying countries, Brazil and Indonesia, will also decrease by 6.2% and 8%, respectively, compared to the 2022/23 crop.

Source