Production problems in Brazil and Asia due to unfavorable weather conditions have kept supply below demand for three years. If the next crop in key suppliers like Brazil and Vietnam falls below potential, global supply could again be below demand.
Coffee prices today, October 20, 2024
In the short term, world coffee prices are unlikely to return to the historical levels of September, but due to continued high demand and low supply, prices are unlikely to fall below $4,500 per ton.
Domestic coffee prices are trading in the range of 111,100 – 111,700 VND/kg. Although prices have decreased compared to the end of September, current coffee prices are still at a high level. Compared to the beginning of October 2023, current coffee prices in the Central Highlands are almost twice as high. This is the first coffee crop year in Vietnam where the price at the beginning of the crop year is over 100,000 VND/kg.
According to experts, robusta coffee prices have been falling continuously and are likely to continue declining. The new harvest from Vietnam's coffee granary is putting downward pressure on the market, as a large quantity of goods is about to be released.
Brazilian coffee exports continue to accelerate at the start of the new season. Analysts at Safras & Mercado Group reported that Brazilian coffee growers have sold approximately 62% of the estimated total output of 66.04 million bags from the current crop. This sales pace is above the five-year average of around 60%.
Furthermore, the vote in favor of postponing the implementation of the European Union's anti-deforestation law (EUDR), which was originally scheduled to take effect at the end of December 2024, will now bring the implementation date to December 30, 2025. The EU's decision to postpone the law has created a sense of relief in the market, as traders no longer have to rush before the EUDR's effective date.
Meanwhile, geopolitical shifts are causing investors to withdraw money from commodity markets and pour it into safe havens like gold – driving the price of the precious metal to continuously reach new highs.
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| Domestic coffee prices closed this week's trading session (October 19th) up 300 VND/kg in some key purchasing areas. (Source: aivivu) |
According to World & Vietnam , at the close of trading this weekend (October 18), robusta coffee prices on the ICE Futures Europe London exchange reversed course, with the November 2024 delivery contract increasing by $17 to trade at $4,702/ton. The January 2025 delivery contract also increased by $17 to trade at $4,615/ton. Trading volume was low.
Arabica coffee prices on the ICE Futures US New York exchange rose, with the December 2024 contract increasing by 2.15 cents to trade at 257.30 cents/lb. Meanwhile, the March 2025 contract also increased by 2.15 cents to trade at 256.00 cents/lb. Trading volume was average high.
Domestic coffee prices closed this week's trading session (October 19th) up 300 VND/kg in some key purchasing areas. Unit: VND/kg
(Source: giacaphe.com) |
Overall, coffee prices are expected to remain high due to inventory and production issues caused by unfavorable weather conditions in the two leading coffee-producing countries, Brazil and Vietnam. In fact, looking at the longer term, fundamental factors are still helping to curb the decline in coffee prices, from weather conditions in Brazil and Vietnam's harvesting regions, to financial markets and transportation costs.
In general, experts predict that coffee market prices next week will heavily depend on weather forecasts from Brazil. Farmers and agronomists in Brazil say the 2025 crop will face problems even if rain helps the plants flower well in the coming weeks.
Rain may have come too late for Brazilian coffee, as news reports indicate that rainfall in Brazil is forecast to remain limited next week. This is a crucial time as coffee plants need water to flower in the state of Minas Gerais. The excessive drought in Brazil is expected to continue keeping market prices high, as rainfall in Brazil has been consistently below average since April. The market is hoping for rain during the summer, which is also the main flowering season for coffee plants in the country.
Meanwhile, numerous weather reports from Vietnam indicate continuous rain is expected in the Central Highlands this weekend and into next week. This is the time when the world's largest producer of Robusta coffee begins harvesting its new crop, which runs from October 2024 to September 2025. Traditionally, people hope for rain to stop around this time to facilitate the harvesting process.
In financial markets, the weak exchange rate between the Brazilian Real and the US dollar could continue to affect the sentiment of local producers in the short term.
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