| Limited supply, coffee export prices continue to increase sharply. Not yet "cooled down", coffee export prices have increased for the 5th consecutive session |
Of which, Arabica prices fell another 0.77% to a one-month low. On the contrary, Robusta prices increased sharply by 3.22%, marking the third consecutive recovery session.
The US Department of Agriculture (USDA) forecasts global coffee production in the 2023-2024 crop year to reach 171.4 million bags, while consumption will reach a record 169.5 million bags. World coffee inventories are expected to fall to a 12-year low of 26.5 million bags.
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| Coffee export prices move in opposite directions |
Vietnam’s Ministry of Agriculture and Rural Development forecasts that coffee output in the current 2023/2024 crop year could fall by 10% to 1.656 million tonnes, the lowest in four years, due to unfavorable weather. Although Vietnam’s harvest is bumper, supply is not as strong as in previous years. Farmers are tending to limit sales in anticipation of higher prices, pushing domestic coffee prices up continuously.
At the opening of the session, prices continued the decline of the previous weekend session as the market continued to react to positive signals from the supply. The Brazilian government said that the country had allowed the export of 4.06 million 60kg bags of coffee beans (equivalent to 243,560 tons) in December. This is the highest monthly export volume in the last 3 years, up 33.75% and 3.77% compared to the same period in 2022 and November 2023, respectively.
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| Vietnam's coffee exports are still growing |
Along with that, the Colombian Coffee Federation also estimates that the country's coffee output will continue to recover in 2023. Accordingly, Colombia is estimated to have produced 11.3 million bags of coffee last year, up 2% compared to 2022. Notably, Colombia's coffee output in December 2023 reached 1.22 million bags, up 24% compared to the same period in 2022, leading to a 3% increase in exports, to 1.06 million bags. Colombia is currently the world's second largest supplier of Arabica coffee.
Positive data from coffee production and export activities helped the market ease concerns about a shortage of Arabica coffee supply, especially when standard inventories also gradually improved, albeit at a slow pace.
However, by mid-evening, the Dollar Index had fallen, dragging the USD/BRL exchange rate down as well. The narrowing exchange rate gap had caused concerns about limited coffee sales from Brazilian farmers due to less foreign currency earned.
Meanwhile, the Robusta market is waiting for Vietnam's December coffee export data with concerns that farmers are limiting sales.
In the domestic market, this morning (January 9), the price of green coffee beans in the Central Highlands and the Southern provinces also increased slightly by 100 VND/kg. Accordingly, domestic coffee is currently purchased at around 67,800 - 68,600 VND/kg.
In 2024, the supply situation in Vietnam is not expected to improve, affecting coffee prices both domestically and internationally.
Vietnam’s total supply remains lower than the previous crop year as carryover inventories from 2022-23 are expected to reach only 390,000 bags, down sharply from 3.58 million bags in 2021-22. As a result, Vietnam’s green coffee exports are forecast to fall by 2.4 million bags to 23 million bags. Ending inventories for 2023-24 are expected to remain low at 359,000 tonnes.
In addition to Vietnam, a number of coffee exporting countries in the world are also affected by climate change. In a recent report, the US Department of Agriculture (USDA) forecast that global Robusta coffee production will decrease for the second consecutive year to 74.1 million bags compared to 76.6 million bags in the previous crop year and is the lowest level in the last four crop years.
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