Positive export figures from Brazil put pressure on coffee export prices

Positive signals from supply, export coffee prices weaken Risk of supply disruption from Asia, export coffee prices increase for 3 consecutive sessions

According to the Vietnam Commodity Exchange (MXV), at the end of the trading session on February 20, Arabica prices lost 0.24% and Robusta prices reversed to decrease by nearly 1%, after three consecutive sessions of increase before. Positive export data from the world's largest coffee supplier, combined with the recovery of inventory data, created double pressure on coffee prices.

On the ICE Futures Europe exchange, the price of Robusta coffee for March 2024 delivery decreased by 32 USD/ton (down 0.98%), to 3,248 USD/ton; the May delivery period decreased by 26 USD/ton (down 0.82%), to 3,146 USD/ton.

Số liệu xuất khẩu tích cực từ Brazil tạo sức ép lên giá cà phê xuất khẩu

Arabica prices lost 0.24% and Robusta prices turned down nearly 1%

However, the downward pressure on Robusta coffee prices was somewhat relieved when data showed that Robusta coffee inventories on the ICE Futures Europe exchange as of February 20 had decreased by another 200 tons, or 1.01% compared to the previous day, to 19,600 tons (about 326,667 bags). This is a new record low inventory level.

On the ICE Futures US exchange, the price of Arabica coffee for March 2024 delivery increased by 0.75 cents/lb (up 0.39%), to 191.60 cents/lb; but the contract for May 2024 delivery decreased by 0.45 cents/lb (down 0.24%), to 186.25 cents/lb.

Arabica coffee prices were supported by a two-week high in the Brazilian real against the dollar, which has prompted Brazilian farmers to sell less of their crop and earn less local currency.

According to the Secretariat of Foreign Trade (Secex), Brazil exported 127,600 tonnes in the first three weeks of February 2024, up from 122,400 tonnes in February 2023. The continued increase in exports during this period helped to alleviate concerns about supply constraints due to shipping disruptions at Brazil’s Santos port.

Along with that, the inventory of qualified Arabica on the ICE-US Exchange continued to recover when it increased by 4,800 bags in the session on February 16, bringing the total amount of certified coffee on the Exchange to over 307,200 bags.

In the domestic market, coffee purchasing enterprises continuously increased the purchase price of raw green coffee beans, causing the price of green coffee beans in the Central Highlands to reach a new peak every day. Specifically, the price of green coffee beans was at 60,000 VND/kg in early December 2023, reaching a record of 70,000 VND/kg in early January 2024, setting a historical mark of 80,000 VND/kg on February 15, 2024. By the morning of February 21, 2024, green coffee beans in the Central Highlands were purchased by enterprises at 81,300, an increase of 1,000 compared to February 19, 2024.

Thus, compared to a year ago, the domestic coffee price is now more than double the price of 39,000 VND/kg in February 2023. Moreover, the price of Robusta coffee in the world market has also increased by about 80% compared to the time when the price reached 1,900 USD/ton at the beginning of last year.

Average coffee export price in 2023 will reach 2,604 USD/ton, up 14.1% compared to 2022.

In 2023, Vietnam's coffee exports will reach 1.61 million tons, down 9.6% compared to 2022. However, due to the sharp increase in export prices, the turnover will still increase by 3.1%, reaching a new record high of 4.18 billion USD. The average export price of coffee in 2023 will reach 2,604 USD/ton, up 14.1% compared to 2022.

Mr. Nguyen Duc Dung, Deputy General Director of the Vietnam Commodity Exchange (MXV), commented: Last year, the Vietnamese coffee industry took advantage of its price advantage to continue writing history in export turnover for the second year, helping coffee become one of the few commodities that contributed positively to the country's export value in 2023.

Currently, the supply shortage and tensions in the Red Sea will create a great driving force for coffee prices in 2024. Robusta prices in the world market in general and Vietnamese coffee prices in particular still have room to maintain high prices, at least in the first half of 2024.

Meanwhile, the Vietnam Coffee and Cocoa Association (VICOFA) estimates that Vietnam's coffee output in the 2023/24 crop year will continue to decrease by another 10% compared to the previous crop year. In addition, the US Department of Agriculture (USDA) forecasts that output in two other major supplying countries, Brazil and Indonesia, will also decrease by 6.2% and 8%, respectively, compared to the 2022/23 crop year.

In addition to the price advantage, the ability to dominate the coffee export market, especially Robusta in the first months of 2024, will bring a double advantage in the process of increasing export value. Indonesia is expected to continue to narrow its export activities, while Brazil's coffee supply surplus in the first half of 2024 will gradually decrease after massive sales in the second half of 2023. Meanwhile, Vietnam's coffee is at its most abundant supply point of the year when the harvest is expected to end around the end of January 2024.

Expectations that coffee prices in the first half of 2024 will continue to remain high are a relatively good stepping stone for the target of coffee export value exceeding 4 billion USD for the third consecutive year, with an expected turnover of 4.5-5 billion USD.

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