Mixed coffee prices, "sell New York, buy London" phenomenon, still concerned about supply

According to estimates, global coffee production is short about 7.26 million bags in the 2023 - 2024 crop year. Coffee supply is expected to be short in the short and medium term. This year's coffee production in Vietnam is down 10 - 15% due to unfavorable weather.

World coffee prices have slightly recovered on the robusta trading floor, while arabica prices have fallen sharply. Coffee prices on the two exchanges have had opposite trends due to the phenomenon of “selling New York, buying London”, resulting from capital flows between markets. The US dollar rose to a nearly one-year high, due to concerns that the US Federal Reserve (Fed) will maintain monetary tightening. This has caused most emerging currencies to continue to depreciate, reducing purchasing power.

Robusta coffee prices have turned up due to strong net selling by speculators in previous sessions. Since the beginning of the week, coffee prices on the London exchange have fluctuated in a rhythmic manner amid concerns about short-term and medium-term supply shortages.

Meanwhile, Arabica coffee prices are also under selling pressure as the Real weakens again. The market continues to monitor weather developments in major coffee growing regions in southern Brazil, with hot, dry conditions and heavy rains expected to negatively impact the 2024 crop yield. The Real continues to fall to a nearly four-month low, encouraging Brazilians to increase sales of agricultural exports.

ICE – London inventory report on September 28 decreased by another 190 tons, down to 42,780 tons, contributing to the significant recovery of robusta futures prices.

Giá cà phê hôm nay 29/9/2023: Giá cà phê

Domestic coffee prices today, September 29, increased by 300 VND/kg in some key purchasing localities. (Source: YouTube)

At the end of the trading session on September 28, coffee prices on international exchanges increased. Robusta coffee prices on the ICE Futures Europe London exchange for November 2023 delivery increased by 22 USD, trading at 2,469 USD/ton. The January 2024 delivery increased by 26 USD, trading at 2,372 USD/ton. Average trading volume was low.

Arabica coffee prices on the ICE Futures US New York exchange for December 2023 delivery continued to decrease by 2.05 cents, trading at 147.2 cents/lb. Meanwhile, the March 2024 delivery price decreased by 2 cents, trading at 148.35 cents/lb. Trading volume increased.

Domestic coffee prices today, September 29, increased by 300 VND/kg in some key purchasing localities.

Average price	Change
USD/VND exchange rate	24,170	0
DAK LAK	66,600	+ 300
LAM DONG	66,000	+ 300
GIA LAI	66,400	+ 300
DAK NONG	66,800	+ 300

Unit: VND/kg.

(Source: Giacaphe.com)

Global coffee supplies have been lower than demand for the third consecutive year, sending prices soaring. But Coffee Board Secretary and CEO Jagadeesha is not worried about rising prices, according to BQ Prime.

After severe frost hit the world’s largest coffee producer two years ago, a shortage of beans has pushed up global prices. Prices of the widely grown robusta variety rose 20% from April to August compared to the previous year, according to data from the Coffee Council.

Mr Jagadeesha expects coffee prices to stabilize for another year before production in Brazil improves and global coffee supplies normalize.

Harsh weather conditions caused by El Nino are raising concerns that robusta beans from major producers such as Vietnam and Indonesia could also be affected, meaning higher prices for instant coffee and espresso.

Companies like Hindustan Unilever Ltd. and Nestle India Ltd. have also warned that robusta coffee prices are rising significantly, impacting their margins. They expect prices to remain volatile for the rest of the fiscal year. Nestle and HUL have also raised prices by 8-10% in the past two months, according to Kotak Institutional Equities’ monthly price tracker. Over the past six months, these companies have seen cumulative increases of 6-22%.

Source