According to the Vietnam Commodity Exchange (MXV), on the coffee market, at the end of last week (September 25-30), Robusta prices increased slightly by 0.04%, trading at US$2,484 per ton. The less-than-positive coffee export figures from Vietnam have somewhat eased the pressure on prices.
In its report on the socio-economic situation in the first nine months of 2023, the General Statistics Office estimated that Vietnam's coffee exports in September reached 65,000 tons, a sharp decrease of 32.7% compared to the same period last year. Cumulatively, exports in the first nine months were 7.3% lower than the same period in 2022.
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| Robusta coffee prices increased last week. |
With reduced supply and increased demand, Vietnam's coffee export prices have now reached record levels. The average export price of coffee in the first half of September 2023 continued to rise, reaching US$3,151 per ton, a 6.3% increase compared to the first half of August 2023 and a 32.1% increase compared to the same period last year – a very high price not seen in many years.
Meanwhile, Arabica prices continued to weaken for the second consecutive week, falling 3.3% from the benchmark. Positive supply prospects in Brazil, combined with increased selling demand from farmers in that country, put downward pressure on prices.
Rainfall has replenished Brazil's main coffee-growing regions, and areas experiencing localized temperatures above 30 degrees Celsius have shrunk, helping flowering coffee plants to develop better. This alleviates concerns about poor crop yields in the 2024-25 season if the dry, hot weather continues.
The divergence in monetary policy decisions between the US Federal Reserve (FED) and the Central Bank of Brazil (BCB) has caused the USD/Brazil Real exchange rate to rise by nearly 2% over the past week. The widening exchange rate differential has stimulated demand for coffee sales from Brazilian farmers, as they receive more local currency.
According to MXV, Arabica prices could continue their downward trend this week if exports continue to be boosted in Brazil.
Indonesia's Sumatra Robusta coffee exports in August totaled 16,166 tonnes, down nearly 55.5% from the 36,313 tonnes shipped during the same period last year, according to government data.
On the domestic market, the price of bulk green coffee beans in the Central Highlands and Southern provinces decreased slightly by 100 VND/kg compared to the previous day, being purchased at around 65,900 - 66,700 VND/kg. Thus, compared to the previous week, domestic coffee prices have decreased slightly by 100 - 200 VND/kg.
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| Vietnam increases investment in processed coffee. |
Speaking with a reporter from the Industry and Trade Newspaper, Mr. Nguyen Van Thao, Chairman of the Bich Thao Coffee Cooperative in Son La, said that the cooperative is currently collaborating with 800 households to switch to growing specialty coffee, and is boosting investment in preliminary processing and processing technology. Currently, 97% of the cooperative's specialty coffee is for export, with the remainder serving the domestic market.
By cultivating, processing, and roasting the coffee beans, the cooperative now has no worries about market access or price fluctuations. The profits from selling coffee have provided growers and the cooperative with a stable income. Currently, specialty Arabica coffee from Son La, intended for export, can fetch prices as high as 230,000 – 270,000 VND/kg.
Currently, the global trend in coffee consumption prioritizes high-quality coffee. Our largest coffee importers, such as the United States and the EU, are shifting from importing whole Robusta beans to processed coffee. The United States, in particular, is increasingly importing more Arabica coffee and gradually reducing Robusta imports, from 6.1 million bags (366,000 tons) in the 2011/2012 crop year to 3.6 million bags in the 2020/2021 crop year. Simultaneously, the proportion of imported processed coffee is increasing from 3.1% in the 2018/2019 crop year to an estimated 6.4% in the 2023/2024 crop year.
According to statistics from the European Coffee Federation (ECF), in the EU, the proportion of processed coffee also increased from 2.3% in 2017 to 5.5% of total coffee imports in 2021.
To boost exports and enhance the value of Vietnamese coffee, since the end of 2014, the Ministry of Agriculture and Rural Development has issued Decision No. 5499/QD-BNN-CB approving the plan for the coffee processing and preservation system linked to production and export until 2020, with a vision to 2030.
Accordingly, Vietnam will prioritize investment in advanced processing facilities to increase the value of coffee products and move towards sustainable development. Specifically, by 2030, green coffee beans will only account for 55-70% of total coffee export value, with the remainder being processed coffee.
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