World coffee prices continued to fluctuate in the first session of the week, with Arabica continuing to decline while Robusta increased sharply.
In the early days of 2024, there is a lot of conflicting information affecting global coffee prices. In the first quarter of 2024, Robusta and Arabica coffee prices will remain high due to concerns about supply shortages and the lowest inventory in the past 12 years.
The US Department of Agriculture (USDA) forecasts global coffee production in the 2023-2024 crop year to reach 171.4 million bags, while consumption will reach a record 169.5 million bags. World coffee inventories are expected to fall to a 12-year low of 26.5 million bags.
Vietnam’s Ministry of Agriculture and Rural Development forecasts that coffee output in the current 2023/2024 crop year could fall by 10% to 1.656 million tonnes, the lowest in four years, due to unfavorable weather. Although Vietnam’s harvest is bumper, supply is not as strong as in previous years. Farmers are tending to limit sales in anticipation of higher prices, pushing domestic coffee prices up continuously.
Meanwhile, in the international market, speculative capital continued to leave commodity markets to seek shelter, in the face of new economic data and skepticism in predicting that the US Federal Reserve (Fed) will cut interest rates at its March 2024 monetary policy meeting.
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| Domestic coffee prices on January 8 increased by 100 VND/kg in some key purchasing localities. (Source: Giacaphe) |
At the end of the first trading session of the week (January 8), the price of robusta coffee on the ICE Futures Europe London exchange increased, the delivery term for March 2024 increased by 90 USD, trading at 2,885 USD/ton. The delivery term for May 2024 increased by 63 USD, trading at 2,790 USD/ton. The average trading volume was low.
Arabica coffee prices on the ICE Futures US New York exchange continued to decrease, with March 2024 delivery down 1.4 cents, trading at 181.40 cents/lb. Meanwhile, May 2024 delivery prices fell 1.45 cents, trading at 179.65 cents/lb. Average trading volume was high.
Domestic coffee prices on January 8 increased by 100 VND/kg in some key purchasing localities.
Unit: VND/kg. (Source: Giacaphe.com) |
In 2024, the supply situation in Vietnam is not expected to improve, affecting coffee prices both domestically and internationally.
Vietnam’s total supply remains lower than the previous crop year as carryover inventories from 2022-23 are expected to reach only 390,000 bags, down sharply from 3.58 million bags in 2021-22. As a result, Vietnam’s green coffee exports are forecast to fall by 2.4 million bags to 23 million bags. Ending inventories for 2023-24 are expected to remain low at 359,000 tonnes.
In addition to Vietnam, a number of coffee exporting countries in the world are also affected by climate change. In a recent report, the US Department of Agriculture (USDA) forecast that global robusta coffee production will decrease for the second consecutive year to 74.1 million bags compared to 76.6 million bags in the previous crop year and is the lowest level in the last four crop years.
The agency believes that total stocks including robusta and arabica at the end of the 2023-24 crop year will continue to tighten and fall to just 26.5 million bags, the lowest level in the past 12 years.
According to the Import-Export Department, Ministry of Industry and Trade, in the coming time, Vietnam's coffee industry will continue to benefit from the high price of robusta coffee, which may even peak due to concerns about supply shortage.
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