Supply pressure, coffee export prices continue to skyrocket nearly 3.9%

Low Robusta coffee inventories on the Intercontinental Exchange (ICE) and concerns about heatwaves affecting output in Brazil have provided double support for prices.

Coffee prices maintain upward momentum

In the closing report of December 10, Robusta inventories on the Intercontinental European Exchange (ICE-EU) stood at 34,760 tons, gradually returning to the lowest level in history at the end of August 2023, with 33,630 tons. At the same time, data from Customs shows that Vietnam's cumulative coffee exports in the first 11 months of 2023 are still 10% lower than the same period in 2022.

In addition, concerns that heat waves spreading to Brazil's main coffee growing region could reduce coffee output in the 2024/25 crop year also contributed to the price increase.

The rise in Arabica was somewhat slower than that of Robusta as the standard Arabica inventory on the ICE-US increased by about 1,000 bags, bringing the total amount of coffee in storage temporarily away from the lowest level in more than 24 years. Data from the Coffee Exporters Association (CECAFE) shows that the country's coffee bean exports in November still increased by 18.2% compared to the same period last year.

In the domestic market, recorded this morning (December 13), the price of green coffee beans in the Central Highlands and the Southern provinces fluctuated between 63,000 - 63,800 VND/kg, a sharp increase compared to yesterday. The first two sessions of the week pushed the domestic market up by more than 3,000 VND/kg.

Vietnam's coffee exports increased sharply again in November 2023 (Photo: Dak Lak Electronic Newspaper)

According to the latest data from the General Department of Customs, after 7 consecutive months of decline, Vietnam's coffee exports increased sharply again in November 2023, reaching 119,297 tons, a sharp increase of 172.8% compared to October 2023. Export turnover in November 2023 reached 356.68 million USD, an increase of 126.4% compared to October 2023 and an increase of 16.8% compared to November 2022.

In the first 11 months of 2023, Vietnam's coffee exports reached nearly 1.42 million tons, equivalent to 3.64 billion USD, down 10.4% in volume but up 0.4% in export value over the same period in 2022.

After 8 consecutive months of increase, the average export price of coffee in November 2023 was adjusted down, reaching 2,990 USD/ton, down 17% compared to the previous month, but still increased sharply by 26.2% compared to the same period in 2022. In the first 11 months of 2023, the average export price reached 2,573 USD/ton, up 12% compared to the same period in 2022.

Regarding the consumption market, in November, the amount of coffee exported to most major markets increased sharply compared to the previous month.

Of which, the European Union (EU) increased 3.6 times to 40,257 tons; the US increased 5.8 times to 10,244 tons. In particular, the Russian market increased 10 times to 12,198 tons, thereby surpassing the US market to become Vietnam's second largest coffee export market last month.

Coffee export prices are expected to remain high, possibly even hitting a new peak in 2024, due to concerns about global coffee supplies.

According to a report by the Foreign Agricultural Service (FAS) under the US Department of Agriculture (USDA), the potential decrease in robusta coffee supply for the global consumption market from major producing countries in Southeast Asia has prompted funds and speculators to return to the futures market to increase purchases, although with a small volume due to caution from the issue of currency interest rates.

In Vietnam, FAS estimates 2023-24 production to fall to 27.8 million bags from an estimate of 31.3 million bags in May 2023 due to unfavorable weather. The estimated carryover stocks have fallen to just 390,000 bags from 2.76 million bags as previously estimated.

FAS also forecasts Indonesia’s total coffee production in the 2023-2024 crop year to fall by more than 18% compared to the previous 2022-2023 crop year, to 9.7 million bags. Indonesia is expected to prioritize raw coffee for the domestic industry, with only about 5 million bags of coffee beans for export, down 35% compared to the previous crop year.

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