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WORLD COFFEE PRICES INCREASED ABNORMALLY, PREDICTING A 'SPARKLING' DECADE FOR VIETNAMESE COFFEE

|December 25th, 2023

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World coffee prices increased very sharply, Robusta coffee prices increased by three digits, a rare phenomenon. Robusta coffee futures prices have set an all-time high, up to 3,179 USD, due to concerns that short-term supply is very lacking in the market and the possibility of further delays due to the closure of the vital Europe-Asia maritime route through the Suez Canal, causing even more stress on demand for spot delivery.

Contributing to this unprecedented increase was information about the ICE inventory report on December 20, which fell deeply to 34,170 tons, the lowest level since early September 2023.

Along with the uptrend of the market, Arabica prices also increased well this session when receiving support from the weak USD and the weather situation in Brazil. Brazil's largest Robusta producer Cooabriel said above-average temperatures and drier-than-normal weather in key growing areas in Espirito Santo state could adversely affect coffee production. Heat could cause losses of 15% to 25% of 2024 output on farms in Espirito Santo state, Brazil's top coffee growing region.

According to experts, Indian coffee prices are very high, Indonesia produces as much for domestic consumption, Brazilian Robusta coffee's quality cannot be compared with Vietnamese coffee. Therefore, it is natural that importers around the world are turning to Vietnam to buy coffee. This situation will continue in the coming years. So this will be the trend of a "sparkling" decade of the upcoming Vietnamese coffee industry.

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According to the Vietnam Cocoa Coffee Association (VICOFA), in December 2023, the price of Robusta coffee in the domestic market increased sharply compared to the end of November 2023. On December 20, the coffee purchasing price reached nearly 70,000 VND/kg, something that has never happened in the history of the Vietnamese coffee industry.

Domestic coffee prices are maintaining a high level at the beginning of the season due to large purchasing demand from export and FDI enterprises. Faced with this situation, many forecasts show that from now until the end of April 2024 (when Indonesia enters the new crop), the scarce supply situation will still occur, causing Vietnam's domestic coffee price to increase at least until April 2024.

Notably, at this time only Vietnam is harvesting Robusta coffee, coffee from other countries such as Indonesia or Brazil must be harvested from April to July 2024. Not only that, due to the effects of climate change and people switching to other crops, the supply of Vietnamese coffee, the country with the world's largest Robusta output, has also declined in recent years, making it even more difficult to grow limited supply, contributing to high prices.

Many leading industry experts predict that our country's export coffee prices are expected to remain high, and may even reach a new peak in 2024 due to concerns about global coffee supply. It is forecasted that exports can earn from 5 billion USD by 2024.

According to vicofa.com

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