Are domestic coffee prices "falling"?

Coffee prices in the domestic market on June 20, 2024, are forecast to reverse and decline. Experts predict that coffee prices are likely to experience less significant fluctuations than in recent months, but will still remain at a high level. This is due to Brazil's peak harvest season, followed by Vietnam's harvest season in October.

Recent weather forecasts indicate a high probability of La Nina occurring from August 2024, which would improve water supply for agriculture.

In addition, tomorrow (local time) will be the expiration date for the July 2024 coffee options contract on the ICE Futures Europe exchange, therefore trading will be limited and will shift to trading in the September 2024 coffee options contracts.

However, not only importers but also exporters are limiting transactions. Despite being in season, Brazil's export volume is slow compared to the multi-year average, as people and exporters want to wait for better prices.

Notably, the latest data from the Center for Applied Economic Research (CEPEA, Brazil) shows that domestic coffee prices in Brazil have risen despite the harvest being in full swing. Accordingly, the price of Brazilian domestic Robusta coffee reached US$3,762/ton at the beginning of this week, and Arabica coffee reached US$4,195/ton. The main reason is that buyers in the international market continue to be concerned about unfavorable weather conditions in Vietnam – the world's largest producer of Robusta coffee.

Domestic coffee prices, updated at 4:30 AM on June 19, 2024, according to www.giacaphe.com, are in the range of 120,000-121,000 VND/kg. The average purchase price in the Central Highlands provinces is currently 121,100 VND/kg, with the highest price in Dak Nong province at 121,200 VND/kg.

Specifically, the purchase price of coffee in Gia Lai province (Chu Prong) is 121,000 VND, in Pleiku and La Grai it is 120,900 VND/kg; in Kon Tum province the price is 121,000 VND/kg; in Dak Nong province the coffee is purchased at the highest price of 121,200 VND/kg.

In Lam Dong province, in districts such as Bao Loc, Di Linh, and Lam Ha, the price of bulk green coffee beans (green coffee beans, fresh coffee beans) is 120,000 VND/kg.

Today's coffee prices (June 19th) in Dak Lak province are as follows: in Cu M'gar district, coffee is being purchased at approximately 121,000 VND/kg, while in Ea H'leo district and Buon Ho town, it is being purchased at the same rate of 120,900 VND/kg.

London Robusta coffee prices (Image: Screenshot from giacaphe.com)

Specifically, the price of Robusta coffee futures contracts for July 2024 delivery on the London exchange was $4,185 per ton, up $77 from the start of the trading session. The September 2024 contract was $4,024 per ton, up $30; the November 2024 contract was $3,869 per ton, up $17; and the January 2025 contract was $3,702 per ton, down $2.

New York Arabica coffee prices (Image: Screenshot from giacaphe.com)

Similarly, Arabica coffee prices on the New York exchange today, at 8:30 PM on June 19, 2024, decreased across all contract periods, fluctuating between 223.70 and 226.30 cents/lb.

Specifically, the July 2024 delivery contract was 226.30 cents/lb, down 0.85 cents/lb from the start of the session. The September 2024 contract was 226.25 cents/lb, down 1.05 cents/lb; the December 2024 contract was 226.85 cents/lb, down 1.20 cents/lb; and the March 2025 contract was 223.70 cents/lb, down 1.05 cents/lb.

Brazilian Arabica coffee prices (Image: Screenshot from giacaphe.com)

Brazilian Arabica coffee prices today, at 8:30 PM on June 19, 2024, showed mixed movements. Specifically, the July 2024 delivery contract was $283.90/ton (down 1.10%); the September 2024 contract was $277.00/ton (up 0.50%); the December 2024 contract was $274.30/ton (up 1.10%); and the March 2025 contract was $271.80/ton (down 1.40%).

Robusta coffee traded on the ICE Futures Europe exchange (London exchange) opens at 4:00 PM and closes at 12:30 AM (the next day), Vietnam time.

Arabica coffee on the ICE Futures US (New York) exchange opens at 4:15 PM and closes at 1:30 AM (the next day), Vietnam time.

For Arabica coffee traded on the B3 Brazil exchange, trading hours will be from 7:00 PM to 2:35 AM (the following day), Vietnam time.

The coffee harvest in Brazil is currently progressing rapidly, taking advantage of the dry climate and early ripening of Arabica coffee. This is putting pressure on coffee futures markets.

Dry weather is expected to continue in most of Brazil's coffee-growing regions, particularly in the south, specifically in the Cerrado and Matas areas of Minas Gerais state, for the next 10 days. Aside from concerns about water stress on the crops, current climatic conditions are considered favorable for harvesting and drying the coffee.

According to the Vietnam Coffee and Cocoa Association (Vicofa), coffee production has decreased due to the impact of climate change and the El Nino phenomenon. In Vietnam alone, production is expected to fall short by approximately 10% in the 2023-2024 crop season.

Global conflicts and tensions in the Red Sea region have led to increased shipping costs and other expenses, driving up coffee prices. Furthermore, many investors worldwide are now choosing coffee as a speculative asset (after oil and gold), further fueling the sharp rise in coffee prices.

Meanwhile, coffee inventories held by producers and processors from the previous season are low, leading to a significant imbalance between supply and demand.

This information is for reference only. Prices may vary depending on the location.

Source: https://congthuong.vn/du-bao-gia-ca-phe-ngay-2062024-gia-ca-phe-trong-nuoc-co-truot-doc-327048.html