Vietnamese coffee, especially Robusta products, plays an important role in the global market. Vietnam is not only one of the world’s largest coffee producers, but it also influences global coffee prices through its exports.
Coffee prices remain high, and inventories are exhausted
In the past week, coffee prices have fluctuated in a narrow range and remained high compared to previous years. Some preliminary estimates show that, although Brazil’s coffee production this year may be up slightly from the last crop, it is still lower than the initial forecast. The global coffee market is in a state of supply shortage. The demand for coffee in many Asian countries, such as China or Korea, is increasing rapidly.
The coffee market is still in a shortage of supply.
According to Mr. Trinh Duc Minh, Chairman of the Buon Ma Thuot Coffee Association (Dak Lak), the increase in coffee prices improves the lives of farmers. As a result, they reinvest better in coffee and don’t go after other crops.
The International Coffee Organization (ICO) has researched and said that the price level of 3 USD/kg can ensure a living income for global coffee growers. However, the coffee price in Vietnam has been quite low (40,000–50,000 VND/kg) and has only started to increase in the past two years. Therefore, the current price is fair to “tie” farmers to coffee.
Vietnam’s coffee exports fall in a row, businesses worry
Mr. Nguyen Hai Nam, Chairman of the Vietnam Coffee and Cocoa Association (Vicofa), said that due to the impact of climate change and the El Nino phenomenon, coffee production has decreased. Particularly in Vietnam, in the 2023–2024 season, production is down by about 10%.
Conflicts in the world and tensions in the Red Sea area have been causing freight and many other costs to increase, which has pushed coffee prices to go up. In addition, many investors around the world have started to choose coffee for speculation (after oil and gold), causing coffee prices to increase sharply.
Vietnam’s coffee exports have decreased for the past four months in a row.
Meanwhile, the coffee inventories of producers and processing enterprises from the previous season are low, leading to a large gap between supply and demand.
According to the General Department of Customs, Vietnam’s coffee exports in May reached only 79,358 tons, a sharp decrease of 47.8% compared to the previous month and 47% compared to the same period last year.
Not only domestic enterprises, but abnormal price fluctuations in the coffee industry also affect foreign direct investment (FDI) enterprises. Many of them have considered finding alternative sources of supply despite highly appreciating the quality of Vietnam’s Robusta coffee.
Vietnam’s coffee exports in the 2023–2024 crop are forecast at about 26.85 million bags (60 kg per bag), down about 5% compared to the previous crop. This figure is expected to continue to decrease to 26.5 million bags in the coming season./.