Robusta coffee prices hit a new peak as the US dollar fell sharply.

At the close of trading on March 7th, Arabica prices surged 3.17%, reaching their highest level in a month, while Robusta prices rose 2.18%, setting a new 30-year high. The risk of supply shortages was the main factor keeping Robusta prices high.

Persistent heatwaves in Vietnam's coffee-growing regions are increasing concerns about the bleak outlook for the new crop supply. In addition, Robusta inventories on the ICE-EU exchange are at historically low levels, with 23,750 tonnes at the close of trading on March 6th.

Arabica prices surged 3.17%, reaching a one-month high, while Robusta prices rose 2.18%, hitting a new 30-year peak.

On March 8th, coffee prices in the Central Highlands provinces were recorded at 90,400 VND/kg ( Lam Dong ) to 91,800 VND/kg (Dak Nong), an increase of 1,400 – 1,700 VND/kg compared to the previous day.

Coffee prices on the London exchange for May delivery also stood at $3,381 per ton, an increase of $72 per ton compared to March 7th.

Coffee prices have been rising steadily since the beginning of the year, increasing by approximately 50%, and have doubled compared to the same period last year.

A coffee producer and trader in Gia Lai predicts that coffee prices will continue to rise, at least for the next two months, as the world receives additional coffee supplies from other producing countries such as Indonesia and Brazil. Further price peaks could reach 100,000 VND/kg, or even 120,000 VND/kg, due to coffee shortages.

For Arabica coffee, the recovery in inventories on the ICE-US exchange was still not strong enough to withstand pressure from the US dollar. Specifically, the 0.54% drop in the Dollar Index attracted capital flows into markets such as coffee, making buying pressure overwhelming. At the same time, the weakening US dollar caused the USD/BRL exchange rate to fall by 0.2%. The narrowing exchange rate spread limited the demand for coffee sales from Brazilian farmers.

Coffee prices continue to hit records, farmers reap huge profits.

Robusta coffee prices have surged largely due to concerns about declining domestic and Asian supply. Currently, coffee is very difficult to obtain in the Vietnamese market, forcing traders and businesses to drive prices up significantly.

In the Asian region, Indonesia reported a 79.73% decrease in exports in January 2024 compared to the same period last year, bringing total exports for the first 10 months of the current coffee crop year (April 2023 to March 2024) to only 1,935,960 bags, a decrease of 2,687,457 bags, or 60.72%, compared to the same period of the previous crop year.

Data reported by ICE-Europe shows that certified and tracked Robusta coffee inventories on the London exchange decreased by a further 1,180 tonnes, or 4.81%, compared to the previous week, to a registered level of 23,350 tonnes (approximately 389,167 bags, 60 kg bags), remaining at a low level since 2014.

Early this morning in the US market, the US Dollar Index (DXY), which measures the fluctuations of the US dollar against six major currencies (EUR, JPY, GBP, CAD, SEK, CHF), fell 0.55% to 102.82.

The US dollar fell after Federal Reserve Chairman Jerome Powell said the central bank is confident that inflation is on track for its 2% target and may begin cutting interest rates.

While the General Statistics Office of Vietnam estimates that coffee exports in February 2024 will only reach 160,000 tons, a decrease of nearly 20% compared to the same period last year, due to the extended Lunar New Year holiday in the Year of the Dragon.

The Vietnam Coffee and Cocoa Association (Vicofa) estimates that the current crop year's production (2023/2024) will decrease by another 10% compared to the previous year. Reports indicate that coffee is currently very difficult to purchase in the Vietnamese domestic market; traders are having to push prices up significantly, adding $220-$280 per ton to the futures price in order to acquire goods.

According to the Vietnam Commodity Exchange, Robusta prices are likely to remain at their 30-year highs, at least until the end of the first quarter of this year. In the domestic market, bulk green coffee prices may even set new record highs amid increasingly serious supply risks. The prolonged drought in the Central Highlands, the country's main coffee-growing region, is leading to concerns about a less positive outlook for the upcoming 24/25 crop season.

Furthermore, the current supply issue remains unresolved due to ongoing Red Sea tensions and low inventory levels in consuming markets. As of March 4th, Robusta holdings on the ICE-EU exchange continued to decline by 120 tons, falling to 23,470 tons, remaining precariously close to historically low levels.

Source: https://congthuong.vn/gia-ca-phe-robusta-tao-dinh-moi-khi-dong-usd-giam-sau-307470.html