On April 24, coffee prices further increased by 2,000 – 3,000 VND/kg and are currently reaching a new record high. The average coffee price in the Central Highlands provinces is 128,700 VND/kg, with the highest price in Dak Nong and Dak Lak at 129,000 VND/kg.
Before the crop, businesses forecasted the highest coffee price to reach 50,000 VND/kg. However, as of now, the price is almost touching 130,000 VND/kg.
In an interview with VTC News , Mr. Nguyen Nam Hai, Chairman of the Vietnam Coffee and Cocoa Association, stated that the main reason stems from Vietnam’s coffee inventory from the previous crop being the lowest in history. In previous years, Vietnam’s inventory has always been around 120,000 – 150,000 tons. However, in the 2023 crop, the inventory is extremely low, only 50% compared to years before.
Meanwhile, the 2023 – 2024 crop yield is also estimated to decrease by 10% compared to the previous crop.
Coffee prices have been on a steep rise. (Illustrative photo: Vietnam Coffee and Cocoa Association).
The drought situation in coffee-growing regions is not only occurring in Vietnam but in all coffee regions worldwide, due to the influence of El Nino. This situation has negatively impacted coffee productivity and yield, especially for Robusta coffee.
Furthermore, according to Mr. Hai, domestic coffee prices have been increasing recently because Vietnam is the only country harvesting coffee during this period. Indonesia will harvest around April-May, while Brazil’s harvest falls around July.
Another reason pointed out by Mr. Nguyen Nam Hai is that global political tensions have led to increased shipping costs as goods have to be rerouted. Meanwhile, over 50% of Vietnam’s coffee is exported to Europe.
However, Mr. Hai also stated that the high coffee price is also due to speculation and not entirely physical coffee. “On the trading floor, when there are many buyers, it can lead to a risk of having more virtual coffee due to going through many stages and different traders. Meanwhile, coffee prices depend on 2 exchanges: Robusta depends on the London exchange, and Arabica depends on the New York exchange,” Mr. Hai explained.
Meanwhile, commenting on domestic coffee prices exceeding many people’s forecasts, expert Nguyen Quang Binh warned that this situation could create risks and tensions in the coffee industry, leading to many businesses facing supply shortages and financial pressures.
According to Mr. Nguyen Nhu Cuong, Director of the Department of Cultivation, Ministry of Agriculture and Rural Development, the increase in coffee prices has both positive and negative aspects. On the positive side, those who have stockpiled coffee will benefit. The negative aspect, however, affects processors and exporters. For example, there may be previous contracts signed at a lower price. But now, with high prices and limited supply, procurement and export are very difficult, leading to low profits.
Closing the most recent trading session, Robusta coffee prices in London for May 2024 delivery increased by $98/ton, to $4,225/ton, while July 2024 delivery decreased by $16/ton, to $4,117/ton.
Arabica coffee prices for July 2024 delivery decreased by 5.8 cents/lb, to 221.85 cents/lb, while September 2024 delivery decreased by 5.65 cents/lb, to 220.1 cents/lb.
London exchange coffee prices had mixed movements, while Arabica decreased. New York exchange coffee prices declined due to prior excessive short-selling
