Low inventories, coffee exports continue to benefit

According to statistics from the Vietnam Commodity Exchange (MXV), at the end of the trading session on September 7 (morning of September 8, Vietnam time), the price of Arabica coffee unexpectedly decreased by 2.6%, to 3,302 USD/ton. In the September 7 report of the ICE-US, the standard Arabica inventory as of the end of September 6 at this agency was stable at 467,919 60kg bags. However, the focus of the market is on 6,600 bags of coffee shipped by Brazil to the ICE Department, awaiting classification to replenish inventory.

Coffee exports benefit from prices

Robusta prices also recorded a sharp decline of 2% in yesterday's session. Robusta inventories on the ICE-EU recovered slightly from 34,370 tons to 34,980 tons, combined with the pull of Arabica prices, putting pressure on Robusta prices.

However, the price reduction is not considered a sustainable trend. Because the top concern in the Arabica market today is still the ability to ensure supply on a global scale, especially the situation of continuously decreasing inventories.

According to MXV, the standard Arabica stocks on the Intercontinental Commodity Exchange (ICE) remain at their lowest level in more than 9 months with no new additions, a signal that the data is unlikely to recover in the short term. This means that the market still has concerns about supply shortages, even though exports have been boosted in Brazil and Honduras.

In Brazil, the 2023-2023 coffee harvest is coming to an end. Cooxupe, the country’s largest coffee producer and exporter, announced that it has harvested over 95% of its cultivated area. In this context, market attention is gradually shifting to the flowering stage of the 2024-2025 coffee crop in Brazil.

According to observers, heavy rains in some major Arabica producing regions recently have led to concerns that they may adversely affect the flowering process of coffee trees. Moreover, early rains at the beginning of the season also raise concerns about a lack of rain at the right stage of development, when coffee trees need rain the most to nourish the fruit. Overall, the 2024-2025 coffee crop is showing less positive signs.

In the Robusta market, inventories on the ICE Exchange continue to be the focus of attention and a major factor influencing price movements.

Robusta inventories on the ICE-EU exchange closed on September 5 down by another 620 tonnes from 34,990 tonnes to 34,370 tonnes, setting a new record low since 2016. Low inventories and sluggish exports from most major suppliers, except Brazil, further raised concerns about the ability to ensure adequate supply in the market.

Robusta coffee exports surged in August in Brazil with more than 700,000 60kg bags, higher than July and the same period in 2022, according to preliminary statistics from the Brazilian Coffee Exporters Association (CECAFE). However, the country's current Robusta crop is estimated to have decreased compared to the previous crop. Therefore, the surplus for export is unlikely to be abundant in the long term.

In the domestic market, it was noted this morning (September 8), in the domestic market, the domestic coffee price continued to adjust down, with a relatively strong decrease of 800 VND/kg. Accordingly, the price of green coffee beans in the Central Highlands and the Southern provinces continued to cool down, to 64,500 - 65,500 VND/kg.

According to the 2022 annual report of the International Coffee Organization (ICO), with 1.83 million tons of green coffee exported in the 2021/2022 crop year, equivalent to 21.9% of the total global coffee export output, Vietnam is the second largest coffee exporting country in the world, after Brazil (with 2.48 million tons, equivalent to 28.19%).

To increase the value of coffee exports, localities are promoting organic coffee cultivation and specialty coffee. According to statistics from the Department of Crop Production - Ministry of Agriculture and Rural Development , by 2022, about 26.14% of Vietnam's coffee area (equivalent to 185.8 thousand hectares) has been granted certificates in standard and sustainable coffee production; including: 4C UTZ Certified, VietGAP, Organic, Rainforest Alliance, FLO, GlobalGAP, FairTrade and HACCP. Certification in coffee production is an important criterion in the production of high-quality coffee and specialty coffee in Vietnam, thereby enhancing the value chain in coffee production. Dak Lak, Lam Dong and Gia Lai are the leading localities in the country in implementing the production of high-quality coffee and specialty coffee.

Thanks to that, in recent years, the amount of coffee exported has increased sharply, if in 2000 it reached 734,000 tons, then by 2010 it reached 1.218 million tons, in 2015 it reached 1.341 million tons, in 2020 it reached 1.565 million tons and in 2022 it reached 1.778 million tons. In particular, 2022 is a very successful year for Vietnam's coffee export activities, with an export volume of 1.78 million tons and a record turnover of 4.06 billion USD.

Thanks to high export prices, Vietnam's coffee exports in 2023 are forecast to reach about 1.718 million tons, the same volume as in 2022, but the export value could reach 4.2 billion USD.

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