Robusta coffee export prices return to 28-year high

According to the Vietnam Commodity Exchange (MXV), at the end of the trading week of January 8-14, the price list of industrial raw materials was filled with green. Leading the way was the 5.15% increase in the price of Robsuta coffee, maintaining its highest price in the past 28 years. Concerns about supply shortages in the market due to the impact of the Red Sea conflict were the most important factor supporting prices last week.

Accordingly, the escalating Red Sea tensions with the participation of the UK and the US have increased concerns about disruptions in the transportation of goods, including Robusta coffee. Previously, analyst Natália Gandolphi said that shipping costs on the Pacific route have increased by 56%. At the same time, experts estimate that about 36% of coffee shipped from Asian countries such as Vietnam and Indonesia will decrease in the first quarter of 2024.

Coffee prices jump

This further adds to concerns about a shortage of Robusta supply in the market as there was previously information that Vietnamese farmers were limiting coffee sales.

Still, Vietnam Customs said coffee exports in December surged 74% month-on-month and were 5.4% higher than the same period in 2022. The figures were more positive than the General Statistics Office's previous estimate released late last month.

Some forecasts currently estimate that coffee exports from Southeast Asian countries such as Vietnam and Indonesia to Europe could fall by 36% in the first quarter of 2024 due to transport disruptions in the Red Sea region.

On the other hand, Arabica is the only red item in the industrial raw material group with a price decrease of 1.53% compared to the reference price. The gradual improvement in supply has put great pressure, causing prices to be in the opposite direction for most items in the group.

Standard Arabica inventories on ICE-US increased by 8,302 60kg bags last week, bringing the total number of coffee bags in storage to 261,446, moving away from the lowest level in more than 24 years.

Vietnam's processed coffee exports (roasted and ground coffee and instant coffee) increased sharply in 2023

In addition, the market expects Brazil and other countries to boost coffee exports as Asian countries are facing transportation problems. In December, the Brazilian government said the country exported 4.06 million bags of coffee beans, up 33% compared to the same period in 2022.

Previously, the Honduras Coffee Institute (IHCAFE) also reported that the world's fourth largest Arabica producing country exported 254,923 60-kg bags of coffee in December, up 30% over the same period last year.

In 2023-24, Brazil's coffee production is forecast to increase by 3.7 million bags to 66.3 million bags. This is mainly due to an increase of 5.1 million bags in Arabica coffee production to 44.9 million bags.

Arabica coffee trees in many Brazilian producing regions continue to recover from severe frosts, high temperatures and below-average rainfall in 2021 that reduced coffee production in the 2021-22 and 2022-23 crop years.

Even so, Brazil's Arabica coffee output remains significantly lower than the peak of nearly 50 million bags in previous bumper crop years.

According to the Vietnam Coffee and Cocoa Association, in the 2023/2024 crop year, Vietnam's coffee output is expected to decrease to 1.6 - 1.7 million tons, lower than 1.78 million tons in the 2022-2023 crop year.

“In 2024, there will be a lot of conflicting information affecting global coffee prices. In the first quarter of 2024, Robusta and Arabica coffee prices will remain high due to concerns about supply shortages and the lowest inventory in the past 12 years,” the Import-Export Department said.

Europe can almost only look to Vietnam for Robusta coffee. Therefore, it is likely that coffee prices in Vietnam will continue to increase in 2024, even reaching the highest level in the world.

Commenting on world supply, the US Department of Agriculture (USDA) forecasts that in the 2023-2024 crop year, global Robusta coffee output will decrease for the second consecutive year to 74.1 million bags compared to 76.6 million bags in the previous crop year and the lowest level in the last four crop years.

This is not very positive news for roasters, especially importers in Europe. The reason is that roasted and instant coffee (mainly made from Robusta coffee) is favored by consumers around the world due to the global economic downturn, high living costs, increasing demand for coffee consumption at home.

This is also the reason why Vietnam's processed coffee exports (roasted and ground coffee and instant coffee) increased sharply in 2023.

Source link: https://congthuong.vn/gia-xuat-khau-ca-phe-robusta-quay-ve-vung-gia-cao-nhat-28-nam-298011.html