Although the 2021-2022 coffee crop has passed a quarter and the new year 2022 has already arrived, the domestic and foreign coffee markets seem to have just begun. Harvest season is very busy right now in the Central Highlands – the country’s key coffee region while the best selling season before the Lunar New Year is still ahead.

Harvesting Coffee New Crop

(Farmer harvest Fresh Coffee new crop in Dak Lak province)

Coffee price on derivatives floors increased well in the past year, domestic coffee price is also up but very slowly. “The boat is up but the water has not yet risen”, that is the way coffee gardeners say when discussing the new crop.

Standard inventory fell sharply, price increased

The price of coffee on the London derivatives exchange becomes higher and higher at the end of 2021. Closing coffee price on the Robusta London floor, where Vietnamese coffee traders often use as a reference, reached US$2,370/ton in the last season of the past year. This result was within the highest range over 10 recent years.

“Despite such a good increase in derivatives prices, the domestic market has not moved much, only from 41.5-42 million VND/ton,” said the owner of a coffee export business located in Buon Ma Thuot city. Many traders believe that the impact of the Covid-19 pandemic is still on the domestic and foreign coffee markets even though the new coffee crop has begun.

Vietnam’s coffee export in 2021 was estimated at 1.52 million tons, down 2.7% compared to 2020. Meanwhile, the US Department of Agriculture (USDA) forecasts that Vietnam’s coffee output in the 2021-2022 crop may reach over 1.8 million tons. Logistics crises such as lack of empty containers and space on ships have greatly limited the output of coffee beans in 2021. Recently, according to market information, a number of official containers to the Chinese market were blocked due to China’s fear of spreading the Covid-19 pandemic. This shows that Vietnamese coffee growers and traders are facing difficulties in both near and far markets.

Efforts to overcome challenges

One of the reasons for the increase in London derivatives price towards the end of the year was the standard inventory at this exchange dropped to less than 100,000 tons on December 30, 2021. This inventory at warehouses in the Robusta London floor was only 98,460 tons, down sharply from 138,070 tons at the end of last year, a market analyst said. However, “be cautious because just a few shipments through the floor, the standard inventory will increase quickly, and the price of Robusta coffee will be as volatile as the New York exchange, up 252 cts / lb in early December 2021 and now down to 226 cts/lb or US$4,982/ton, down 26 cts/lb or US$573/ton, as the market sees the possibility of inventories rising again,” he warned.

Robusta Coffee Roasted

(Roasted Robusta Coffee instant)

Currently, the export price of domestic robusta coffee is very soft, from minus 400/500 USD/ton below the listed price on the London floor. With that level, traders have enough “facilitation” to put goods on the derivatives floor if it is difficult to sell to roasters. Moreover, real coffee sellers on the floor will receive money faster, only about ten days after the auction, while selling to roasters can take 6 to 9 months to receive money.

As expected of the unstable situation, a gardener and the owners of high-quality coffee shops in the country are “working hard” to collect coffee. These days, Mr. Trinh Duc Minh, Chairman of Buon Ma Thuot Coffee Association, is running like a shuttle to each garden to encourage the production of high quality and specialty coffees by collecting 95-100 % ripe coffee and preparing for the national specialty coffee contest “Vietnam Amazing Cup 2022” which is expected to be held right after the Lunar New Year. While gardeners only sell coffee at export purchasing points for 41-42 million VND/ton, a number of coffee shops in the country cooperate with gardeners to buy carefully selected coffee for 80-100 million VND/ton.

Business is about taking risks. Since the price is not decided by the growers and the producing countries, the only way to overcome the risk of price now is to create a cup of high-quality coffee. Consumers may accept and pay well for the coffee they drink.

The percentage of ripe coffee picked is not high, only about 10% of the total output of 1.8 million tons, however, the purchasing price is double or more. This can help the price of coffee sold on the market does not depreciate quickly once there is selling pressure before Tet.