Vietnam’s coffee production for export is declining strongly. This shows that the supply of coffee on the market is limited. Meanwhile, the new harvest won’t come until October.
On May 20, the average price in the domestic market increased by 200 VND compared to the previous day to 104,000 VND/kg. Thus, the price of coffee has recovered about 10,000 VND/kg from the lowest level in early May. However, compared to the peak set at the end of April, the domestic coffee price is about 30,000 VND/kg lower.
For the international market, at the end of the trading session on the London floor over the weekend, the price of Robusta coffee delivered in July was 3,518 USD/ton, an increase of 98 USD/ton against the previous day. Compared to the trading session on May 8, the price of Robusta coffee has increased by 140 USD/ton in the same term.
The coffee price decreased and then increased sharply.
Mr. Nguyen Nam Hai, Chairman of the Vietnam Coffee and Cocoa Association (VICOFA), said that there are four main reasons for this development.
Firstly, Vietnam’s coffee exports in April reached about 148,000 tons, down 9.5% in volume over the same period last year. Based on the data in the first half of May (up to May 15), the figure was only about 40,000 tons, down 30% over the same period in 2023. The coffee export market share of foreign enterprises FDI accounted for 47%, which was a strong increase compared to the previous crop (about 32% in the 2021–2022 crop). This shows that Vietnam’s coffee inventory from the last crop is very low, while it will not be until October 2024 for a new harvest.
Secondly, although Brazil is entering the harvest, it is only at the beginning of the season. The output is not high, and the price is not much lower than that of Vietnamese coffee. In addition, international freight is still high, so it is difficult for the coffee price to decrease.
Thirdly, investment funds and international speculators, after the sale to make profits, now start a new buying cycle to boost coffee prices.
Fourth, although it rains in coffee-growing areas in Vietnam, the weather conditions will affect the next season. From now until October 2024, Vietnam’s coffee supply will be very limited.
Earlier, Vietnam’s market-leading coffee exporters acknowledged the decrease in inventories, which are expected to run out of stock in May or June and not be enough to supply the market until the new crop. /.