Coffee prices continue to fall, Vietnam's reserves forecast to drop to very low levels after 2024 crop

In Vietnam, localities have begun harvesting early-ripening coffee for the 2023/2024 crop year. This could help increase supply for export activities in the coming time.

World coffee prices closed the weekend session with consecutive declines. In particular, traders and hedge funds extended the time to liquidate their net positions, due to "over-buying" in the previous two weeks, pushing prices on both exchanges down.

Other factors affecting the market include data reporting that ICE – London inventories are increasing sharply, favorable weather in Brazil, while localities in Vietnam have begun harvesting early-ripening coffee.

News that southern Brazil, the top coffee growing region, is receiving plenty of rain will support the new crop. The current crop development is very good and expectations for the next harvest remain positive, which is good news for supply.

In Vietnam, localities have begun harvesting early-ripening coffee for the 2023/2024 crop year. This could help increase supply for export activities in the coming time. Many predictions say that Vietnam's coffee crop this year will continue to decrease in output. Therefore, the risk of a long-term supply shortage is still very worrying and Vietnam's coffee reserves are forecast to decrease to a very low level after the 2024 crop year.

Data reported by ICE – London on October 26 showed that robusta coffee reserves increased by 2,790 tons, or 7.57% compared to the previous day, to 39,760 tons (about 626,667 bags, 60 kg bags), a two-week high, contributing to the correction of London futures prices for the third consecutive session.

Domestic coffee prices fell for the fourth consecutive session. In the last trading session of the week, the market fell another 500 VND/kg, trading at 58,700 - 59,500 VND/kg in key coffee growing regions.

Giá cà phê hôm nay 28/10/2023: Giá cà phê

Domestic coffee prices today, October 28, continued to decrease by 500 VND/kg in some key purchasing localities. (Source: YouTube)

At the end of the trading session last week (October 27), the price of robusta coffee on the ICE Futures Europe London exchange for delivery in January 2024 continued to decrease by 37 USD, trading at 2,383 USD/ton. The delivery in March 2024 decreased by 30 USD, trading at 2,355 USD/ton. Average trading volume.

Arabica coffee prices on the ICE Futures US New York exchange for December 2023 delivery decreased by 0.25 cents, trading at 160.95 cents/lb. Meanwhile, the March 2024 delivery price decreased by 0.4 cents, trading at 160.50 cents/lb. Trading volume is high on average.

Domestic coffee prices today, October 28, continued to decrease by 500 VND/kg in some key purchasing localities.

Average price	Change
USD/VND exchange rate	24,360	- 30
DAK LAK	59,500	- 500
LAM DONG	58,700	- 500
GIA LAI	59,400	- 500
DAK NONG	59,500	- 500

Unit: VND/kg.

(Source: Giacaphe.com)

The yield on long-term US Treasury bonds fell slightly ahead of the US Federal Reserve's monetary policy meeting in the middle of next week, causing the stock market to decline, while the greenback's increased value pushed commodity prices into negative territory.

Concerns that the US Federal Reserve (Fed) will continue to maintain high interest rates for a long time were raised after the US released a series of data showing the economy remains strong.

Specifically, the US Bureau of Economic Statistics said that the US GDP growth in the third quarter increased by 4.9% compared to the second quarter, 0.6 percentage points higher than the market forecast. This is also the largest quarterly GDP growth in the US since the fourth quarter of 2021. In addition, consumer spending growth, which accounts for more than two-thirds of US economic activity, increased by 4% in the third quarter after increasing by only 0.8% in the second quarter.

The stronger US dollar also boosted the selling pressure of commodities. The USDX index ended the session up to 106.6 points, marking the third consecutive session of gains, thanks to positive US economic data while the Euro weakened. Previously, the Euro was under pressure when the European Central Bank decided to keep interest rates at 4%, ending a 10-time consecutive rate hike streak, as inflation showed signs of cooling.

Commenting on the current market developments, experts said that the London exchange had fallen to $2,400/ton but then rose. If it loses the $2,397/ton mark, the price will fall to $2,350/ton. Meanwhile, the New York exchange needs to stay above 159 cents/lb if it does not want to fall to the bottom of 145 cents/lb.

Source