Global coffee prices continued to rise on derivatives exchanges after the USDA's semi-annual report cut its forecast for global coffee production in the 2023/2024 crop year to 171.4 million bags from its previous estimate of 174.3 million bags.
Robusta coffee prices have reversed course after the extended Christmas holiday, also due to concerns about supply delays as the world’s vital shipping routes are experiencing problems. The Panama Canal is dry, the Suez Canal is blocked due to Houthi terrorism. Shipping lines have all voiced their concerns about adjusting freight rates due to higher shipping costs.
Coffee futures continued their upward trend as Brazil’s real rose to a nearly five-month high, preventing farmers from selling their coffee for export, and drought declarations in Espirito Santo, Brazil’s main robusta coffee-producing state, prompted the government to consider activating a subsidy program for farmers hit by crop failures.
Meanwhile, according to Reuters , Vietnamese farmers do not want to sell coffee at current prices, but expect prices to increase further, pushing prices on the London floor to continue to increase... Vietnam's Ministry of Natural Resources and Environment said that prolonged drought and water shortages caused by the El Nino weather phenomenon will seriously affect the Central Highlands coffee region during the dry season of 2024.
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| Domestic coffee prices on December 28 increased by 800 - 900 VND/kg in some key purchasing localities. (Source: YouTube) |
Recorded in the closing session on December 28, the price of robusta coffee on the ICE Futures Europe London exchange adjusted up, the delivery term for March 2024 increased by 32 USD, trading at 2,869 USD/ton. The delivery term for May 2024 increased by 46 USD, trading at 2,812 USD/ton. Average trading volume.
Arabica coffee prices on the ICE Futures US New York exchange increased well, with the March 2024 delivery period increasing by 3.4 cents, trading at 197.75 cents/lb. Meanwhile, the May 2024 delivery period increased by 3.4 cents, trading at 198.35 cents/lb. Average trading volume is high.
Domestic coffee prices on December 28 increased by 800 - 900 VND/kg in some key purchasing localities.
Unit: VND/kg. (Source: Giacaphe.com) |
DXY continued to decline due to speculation that the Fed would start a rate cut cycle in the first quarter of the year, which supported emerging currencies and helped the global market increase its purchasing power, pushing the prices of derivatives markets, especially gold and stocks, to sky-high levels.
Meanwhile, the US Department of Agriculture (USDA) has cut its forecast for global coffee production in the 2023/2024 crop year to 171.4 million bags from its previous estimate of 174.3 million bags.
According to the Vietnam Coffee and Cocoa Association (Vicofa), domestic coffee prices are expected to remain high next year due to a severe shortage in supply in the 2022/2023 coffee crop. The association estimates that there is a shortage of about 1.5 - 2.5 million bags of coffee under contract and needs to be met from the current coffee harvest, while farmers are still reluctant to sell coffee at current prices, pushing prices further up on the London exchange.
Of particular concern is the reduction in global robusta output in 2023/2024 to 74.1 million bags compared to the previous estimate of 78 million bags and global coffee inventories in 2023/2024 to 26.5 million bags compared to the June estimate of 31.8 million bags.
Expectations of higher Brazilian coffee exports in November put downward pressure on prices early in the session, and forecasts of showers across major growing regions in southern Brazil in the first week of 2024. However, prices then started to rise on the idea that “there is no certainty” that rain could cover large areas.
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