Positive signals from supply, export coffee prices weaken

Disrupted supply chain pushes export coffee prices to continue to rise. Improved supply, export coffee prices fall for third consecutive session.

According to the Vietnam Commodity Exchange (MXV), at the end of the trading week of February 12-18, Arabica prices decreased by 2.78% and Robusta prices lost 2.36% compared to the reference price. The decline occurred mainly in the first three sessions of the week when the market reacted to positive signals from supply and the strengthening of the USD.

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Arabica prices fell 2.78% and Robusta prices lost 2.36% compared to the reference price.

The Coffee Exporters Association CECAFE said Brazil shipped 3.67 million bags of green coffee, up 45.4% year-on-year. Of this, Arabica exports rose 31.1% to 3.21 million bags. At the same time, qualified Arabica stocks on the ICE-US Exchange increased by nearly 9,470 bags to around 307,265 bags, exceeding 300,000 bags for the first time since November 2023. The improvements in coffee exports and stocks helped ease concerns about supply shortages in the market.

In addition, the US consumer price index (CPI) in January 2024 increased by 3.1% compared to the same period last year, 0.2 percentage points higher than economists ' forecasts, causing money to flow from risky markets such as coffee to safe-haven markets such as the USD and gold.

Robusta also recorded 3/5 sessions in the red, mainly due to the impact of Arabica prices. Supply concerns for this commodity remain as inventories continue to fall to record lows.

Low inventories and weaker-than-expected post-Tet sales from Vietnam have helped Robusta surge. Amid a global Robusta supply shortage, supply remains constrained and domestic prices in many major producing countries remain resistant, while terrorist attacks on shipping routes through the Red Sea have also contributed to increased demand for Brazilian Robusta Conilon.

In the domestic market, it was recorded yesterday (February 18) that the price of green coffee beans in the Central Highlands and the Southern provinces increased by 900 VND/kg. Accordingly, domestic coffee was purchased at around 80,300 - 81,400 VND/kg.

Robusta prices have risen to a 30-year high due to concerns about tight supplies in Vietnam, the world's largest Robusta exporter, according to a report by the International Coffee Organization (ICO).

Coffee exports increased in both volume and value, pushing domestic coffee prices to high levels.

Ongoing supply concerns, particularly in Southeast Asia, coupled with record low ICE inventories, have pushed Robusta up 14% year-to-date. The rally in Vietnam has been even stronger as traders are still holding onto beans in anticipation of higher prices, exacerbating the supply problems.

Mr. Do Ha Nam , Chairman of the Board of Directors and General Director of Intimex Group Joint Stock Company, said that during the recent Giap Thin Tet holiday, the company's orders were prepared. Therefore, after Tet, export activities continued as normal.

According to Mr. Nam, the current tension in the Red Sea affects shipping costs and delivery times, however, Intimex and some other export businesses using FOB (delivery at the port of departure) are almost unaffected.

According to experts from the Vietnam Coffee and Cocoa Association (VICOFA), importers around the world are looking to Vietnam to buy coffee. In 2023, businesses almost "emptied" their warehouses for export. This is also the first time in history that by June 2023, people had no coffee to sell. Currently, the inventory of this commodity has decreased sharply, combined with a number of other factors in the market, which is the reason why coffee prices have continuously reached new peaks.

The report of the Ministry of Agriculture and Rural Development forecasts that commodity prices will have many changes this year. In January, prices of most commodities tend to increase compared to November 2023. Of which, coffee increased by 4-9%, regular rice by over 6%, Cat Chu mango by 8%, raw shrimp (4%), raw fish (5-6.7%)...

The Ministry of Agriculture and Rural Development has set a target growth rate of 3.2-4.0% for the whole sector; total export turnover of agricultural, forestry and fishery products is 54-55 billion USD. In particular, key agricultural products such as rice, coffee and durian will continue to grow this year.

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