Why has coffee prices continued to increase, "decoding" unusual phenomena in Vietnam's harvest?

The world's largest robusta producer - Vietnam is in the middle of the 2024 - 2025 harvest season, with harvesting activities underway amid favorable weather in the Central Highlands, but output is expected to continue to decline compared to last year.

Coffee price today 11/27/2024

World coffee prices have been rising continuously since the beginning of the week, robusta surpassed the 5,000 USD threshold, continuing to approach the 5,200 USD threshold. Arabica coffee prices in New York reached 308.85 Cent/lb.

Domestic coffee prices have also increased steadily in recent sessions, currently trading in the range of 121,800 - 122,700 VND/kg. The best price ever for coffee farmers during the harvest season.

Experts say there are three reasons for the continuous increase in coffee prices during the harvest season of the world's leading abundant supply. First, concerns about crop prospects in the two leading suppliers, Brazil and Vietnam, continue to support the market's upward momentum. Next is concern about rising input costs and third is that freight rates are very high during the peak shipping season at the end of the year. In addition, concerns about the global geopolitical situation have caused speculators to withdraw capital and move to commodity exchanges.

Traders said supplies are tightening as Brazilian farmers hold back on sales in hopes of further price gains, while shipping problems and container shortages have slowed the flow of cargoes from the world’s largest producer. Concerns that next year’s Brazilian harvest could be lower than previously expected have also contributed to recent price gains, according to Reuters.

Meanwhile, as for the future of the crop, while recent rains in Brazil have helped the flowers bloom, there are concerns that the flowers may not attach to the branches, which could lead to a loss of production next season. The US Department of Agriculture (USDA) recently lowered its forecast for Brazil’s 2024-25 crop to 66.4 million bags, 3.5 million bags lower than the previous forecast, but still up slightly from the previous season, according to comunicaffe.

At the source in Vietnam, in the first 15 days of November, Vietnam exported only 20,933 tons of coffee, with an export turnover of over 121.79 million USD, down 44.8% in volume but up 1.8% in value compared to the same period last year. Normally, in previous years, the export volume in November gradually increased when farmers entered the main harvest period. However, this year's data reflected an unusual phenomenon: Coffee prices increased but export output decreased sharply.

Explaining this, a representative of the Vietnam Coffee and Cocoa Association (Vicofa) said the main reason was the high price of coffee, which prevented a price balance between supply and demand. Buyers waited for prices to drop, sellers waited for prices to increase. The two sides have not found a common price to conduct the transaction, so many transactions have stalled. Many traders even "hold back" their goods, waiting for the coffee price to rise before releasing them to the market. International buyers still have stockpiled goods, so they are not in a hurry to close orders.

Domestic coffee prices on November 26 continued to increase sharply by VND800-1,000/kg in some key purchasing localities. (Source: Kitco)

According to World & Vietnam , at the end of the trading session on November 26, the price of robusta coffee on the ICE Futures Europe London continued to increase sharply, the delivery term for January 2025 increased by 65 USD, trading at 5,175 USD/ton. The delivery term for March 2025 increased by 78 USD, trading at 5,114 USD/ton. The average trading volume was high.

Arabica coffee prices on the ICE Futures US New York exchange continued to increase, with the March 2025 delivery period increasing by 4.05 cents, trading at 308.85 cents/lb. Meanwhile, the May 2025 delivery period increased by 4.05 cents, trading at 306.30 cents/lb. Trading volume was high.

Domestic coffee prices on November 26 continued to increase sharply by 800 - 1,000 VND/kg in some key purchasing localities. Unit: VND/kg

Average price	Medium
USD/VND exchange rate	25,170	05
DAK LAK	121,600	+ 1,600
LAM DONG	121,000	+ 2,200
GIA LAI	121,600	+ 1,700
DAK NONG	121,900	+ 1,900

(Source: giacaphe.com)

Regarding the production outlook for other suppliers, USDA revised up its estimate of Colombia’s production in 2023-24 by more than half a million bags to 12.76 million bags. It also expressed optimism about the current crop, with production expected to reach nearly 13 million bags.

In India, production is forecast to be stable, with estimates for 2023-24 reaching just over 6 million bags and rising slightly to 6.2 million bags this year.

Meanwhile, in Indonesia, USDA lowered its 2023-2024 production estimate to 7.65 million bags, but it is expected to recover and increase to 10 million bags in 2024-2025.

In the latest development, the process of delaying the implementation of the EU Deforestation Regulation (EUDR) continues to face many obstacles. The Council and the EU Parliament failed to reach an agreement last Thursday (November 21). The next round of negotiations is scheduled for December 3. If an agreement is reached, the delay could be approved right when the regulation was originally scheduled to come into force on December 30. If the negotiations fail, the deadline for implementing the law will return to the original date of December 31, 2024.

Source: https://baoquocte.vn/gia-ca-phe-hom-nay-27112024-nguyen-nhan-gia-ca-phe-noi-dai-chuoi-ngay-tang-giai-ma-hien-tuong-khac-thuong-trong-vu-thu-harvest-cua-viet-nam-295243.html