World coffee prices fluctuated on the London and New York derivatives exchanges amid forecasts of abundant arabica supplies from Brazil as the leading producer enters its new crop harvest season this year with many forecasts of increased output.
Meanwhile, robusta coffee prices remained positive amid concerns about temporary supply tensions due to crop failures in Indonesia and the end of the crop period in Vietnam, while the London exchange maintained a prolonged inverted price structure.
However, funds and speculators are still cautious as Brazil begins to show signs of increasing the amount of Conilon robusta delivered to the auction floor.
ICE – London reported that inventories, on July 17, at the beginning of the week, increased by 220 tons, to register at 54,540 tons (about 909,000 bags, 60kg bags), recording the first increase in inventories since the end of March 2023.
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| Domestic coffee prices today, July 18, increased by 100 to 200 VND/kg in some key purchasing localities. (source: pinterest) |
At the end of the first trading session of the week (July 17), the price of robusta coffee on the ICE Futures Europe London continued to increase slightly. The price of robusta coffee futures for delivery in September 2023 increased by 12 USD, trading at 2,552 USD/ton. The price of futures for delivery in November increased by 1 USD, trading at 2,406 USD/ton. Trading volume was low.
The price of Arabica coffee on the ICE Futures US New York exchange for September 2023 delivery fell 5 cents, trading at 155.8 cents/lb. Meanwhile, the price of December 2023 delivery fell 4.65 cents, trading at 155.65 cents/lb. The average trading volume is high.
In the domestic market, coffee prices increased by 100 - 200 VND/kg. Currently, the lowest transaction price is 65,000 VND/kg, recorded in Lam Dong province.
Domestic coffee prices today, July 18, increased by 100 to 200 VND/kg in some key purchasing localities.
Unit: VND/kg. (Source: Giacaphe.com) |
Highlights of the past week include positive US economic index reports, promising the possibility that the Fed will soon end its cycle of raising basic interest rates, and the weakening of the USDX Index will support emerging currencies to increase in value.
According to Safras & Mercados, Brazilian farmers have sold about 32% of the total expected output of the current 2023/2024 coffee crop, but still lower than the average of previous crops.
For Vietnamese exporters, despite high expectations, coffee exports in the third quarter of 2023 are likely to slow down due to depleted supplies.
In the first 9 months of the current crop year, Vietnam exported 1.44 million tons of coffee, while coffee output in the 2022-2023 crop year, according to estimates by the Vietnam Coffee and Cocoa Association (VICOFA), decreased by 10-15% compared to the previous crop year to 1.5-1.6 million tons. Experts predict that the export volume from now until the end of the year may decrease by about 50% compared to the same period due to the gradual depletion of inventories, mainly in the hands of FDI exporters.
In the past 3 years, the coffee growing area of Vietnamese farmers has been continuously reduced due to being replaced by other fruit trees. In addition, the negative impact of climate change has caused coffee trees to fail, reducing output even more.
Recently, the US Department of Agriculture (USDA) forecasted that Vietnam's coffee output in the 2023-2024 crop year will increase by 1.6 million bags (5%) to 31.3 million bags due to favorable weather. The expected production area will remain unchanged with nearly 95% of the total output still being robusta coffee.
Rainfall is forecast to be 10-20% higher than average, supporting irrigation and coffee growth. Farmers are also gradually replanting coffee trees to increase production. However, Vietnam's green coffee exports are expected to fall 1.5 million bags to 24.5 million bags based on low opening inventories and stricter import regulations from the European Union.
USDA forecasts Vietnam's 2023-2024 ending stocks to increase by 1 million bags from the previous crop to 2.7 million bags.
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