Coffee prices continue to fall, Arabica prices drop sharply; hope for Vietnamese coffee growers

Observers say that the price trend on both world coffee futures exchanges is still fluctuating within a neutral range, even though the strong USD index has supported highly liquid derivatives exchanges. Gold and crude oil prices have increased continuously, so coffee has had to sacrifice, despite the market still having concerns about supply.

World coffee prices continued to correct downward on both derivatives exchanges following pressure from interest rates being raised by major central banks.

Meanwhile, in the world’s largest coffee exporter, the Brazilian Monetary Policy Committee (Copom)’s policy, which is going against the global trend, has caused liquidation of risky assets and stimulated farmers to boost export sales. Moreover, Brazil is now harvesting more than half of this year’s new crop, amid favorable weather in major coffee growing regions that have been reported to speed up the harvest. A slight decline in the real exchange rate has also helped Brazilian farmers boost coffee export sales.

Coffee inventories on both futures exchanges continue to remain low. The ICE-London inventory report on August 3 continued to decrease by 260 tons, down to 51,050 tons, but could not prevent Robusta coffee prices from falling.

Domestic coffee prices today, August 5, continued to decrease by 500 - 600 VND/kg in some key purchasing localities. (Source: Freepik)

At the end of the trading session on August 4, the price of robusta coffee on the ICE Futures Europe London continued to decrease. The price of robusta coffee futures for September 2023 delivery decreased by 33 USD, trading at 2,612 USD/ton. The price of November delivery decreased by 28 USD, trading at 2,488 USD/ton. The average trading volume was high.

Arabica coffee prices on the ICE Futures US New York exchange fell sharply, with the September 2023 delivery contract down 3.4 cents, trading at 161.35 cents/lb. Meanwhile, the December 2023 delivery contract fell 3.05 cents, trading at 160.95 cents/lb. Trading volume was high.

Domestic coffee prices today, August 5, continued to decrease by 500 - 600 VND/kg in some key purchasing localities.

Average price	Change
USD/VND exchange rate	23,550	0
DAK LAK	66,800	- 500
LAM DONG	66,100	- 500
GIA LAI	66,400	- 600
DAK NONG	67,000	- 600

Unit: VND/kg.

(Source: Giacaphe.com)

According to analysts, the sharp increase in robusta coffee prices in recent months is due to a poor coffee crop in Indonesia; Brazil's tightening of supply and the global economic recession have caused consumers to turn to cheaper robusta coffee, pushing up the price of this type of coffee.

Vietnam is the world's largest exporter of robusta coffee, and fluctuations in coffee supply from Vietnam have directly affected global coffee prices. This may partly explain the recent increase in coffee prices.

For Vietnamese coffee growers, according to statistics from authorities, although over 90% of households have sold all their coffee since the price of this item was below 50,000 VND/kg, the fact that the domestic and international coffee markets continuously reached new price peaks in July and are currently fluctuating around 66,000 VND-68,000 VND/kg still makes many coffee farmers feel like they are living in a dream.

Farmers hope that at this rate, even if the market fluctuates downward, there is a high probability that coffee will still maintain a price above 50,000 VND/kg, a level that coffee growers have almost never reached.

According to the General Statistics Office, in July 2023, Vietnam exported 80,000 tons of coffee, reaching 371 million USD, although down 32.1% in volume but up 37.4% in value compared to the same period last year. Coffee exports in the first 7 months of 2023 reached 1.08 million tons, down 6% and 2.76 billion USD, up 6% over the same period last year. Coffee export turnover in the first 7 months of 2023 is also the highest turnover since 2013.

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