World coffee prices on the two derivatives exchanges increased sharply over the weekend, as many factors had a strong impact on the market. Last week, the price of robusta coffee in London for November 2023 delivery increased by 189 USD/ton; the price of arabica coffee for December 2023 delivery increased by 10.35 cents/lb.
While Southeast Asian supplies are depleted, reports of continued declines in ICE inventories and a lack of shipments to export ports in Brazil due to transport issues have also contributed to the upward price trend. Information about the supply situation in the world's second largest coffee producer, Vietnam, has also caused concerns for the market. Rising interest rates in Indonesia and difficulties in borrowing capital in Vietnam have indirectly slowed down the global coffee market, making exports difficult, and also affected supply in the short term.
However, domestic coffee prices are going against the trend of the world market. Domestic coffee prices are still approaching the 60,000 VND/kg mark. But last week, the domestic market dropped sharply by 3,000 VND/kg, contrary to the hot increase on the London market.
The reason for the contrast comes from the fact that the price difference in the Southeast Asian region is very high, and needs to be adjusted and rebalanced after the first delivery notice date (FND).
 |
| Domestic coffee prices today, October 23, continued to increase by 300 - 400 VND/kg in some key purchasing localities. (Source: Coffeeam) |
At the end of last week's trading session (October 21), the price of robusta coffee on the ICE Futures Europe London exchange for November 2023 delivery was 80 USD, trading at 2,577 USD/ton. The January 2024 delivery increased by 77 USD, trading at 2,479 USD/ton. Trading volume was very high.
Arabica coffee prices on the ICE Futures US New York exchange for December 2023 delivery increased by 1.3 cents, trading at 165.25 cents/lb. Meanwhile, the March 2024 delivery price increased by 2.6 cents, trading at 164.40 cents/lb. Trading volume increased very high.
Domestic coffee prices today, October 23, continued to increase by 300 - 400 VND/kg in some key purchasing localities.
Unit: VND/kg. (Source: Giacaphe.com) |
In the context of heightened risk concerns due to the war in the Middle East, new speculative money flows massively into commodity exchanges in general, including coffee. Coffee futures are a highly liquid financial derivatives market (along with gold and crude oil), so they are very sensitive, in addition to the intrinsic fundamental factors of the dominant commodity.
Experts say that a price adjustment for the two coffee exchanges to get out of the overbought zone will take place this week. This is an opportunity for investment funds to balance their financial positions.
Vietnam's robusta coffee output in the 2022-2023 crop year is estimated to decrease by about 10-15% compared to the previous crop year due to the impact of unfavorable weather and the wave of crop conversion. Many farmers have switched to growing durian and passion fruit for higher profits.
Supply from other major exporters such as Brazil and Indonesia is showing signs of shrinking from early 2023. According to the Brazilian Institute of Geography and Statistics, the country’s robusta coffee production in 2023 could fall by nearly 9% compared to last year. Volcafe also predicts that Indonesia’s production will drop to its lowest level in nearly a decade.
According to the forecast of the Vietnam Commodity Exchange, coffee prices will continue to fluctuate according to changes in supply and demand. In the long term, the Import-Export Department forecasts that the growth rate of coffee prices may slow down due to unfavorable macroeconomic factors by the end of 2023. Major central banks still decide to pursue tight monetary policies to bring inflation to the target level, the world economic picture will continue to be gloomy. As a result, the demand for coffee consumption will be difficult to recover and may even decline sharply in the near future.
Coffee prices may even begin to decline gradually in the fourth quarter of 2023 to 2024 as the recession becomes closer. Under pressure from continued weakening demand due to concerns about an economic recession, world coffee prices in general and Vietnam in particular will continue to decline. However, the decline in coffee prices will be adjusted slowly because the supply is not as positive as the market has been expecting. 2023 is a bad year for coffee according to the biennial crop cycle in Brazil, which will be a factor limiting the decline in prices caused by weakening demand for this commodity.
Source
![[Photo] Prime Ministers of Vietnam and Thailand visit the Exhibition of traditional handicraft products](https://vphoto.vietnam.vn/thumb/1200x675/vietnam/resource/IMAGE/2025/5/15/6cfcd1c23b3e4a238b7fcf93c91a65dd)
Comment (0)