As the global coffee supply dwindles, Vietnamese Robusta coffee prices soar to unprecedented levels, mirroring a 15-year high. This article unveils the intricate dynamics behind this surge, providing essential insights for buyers venturing into the Vietnamese coffee sourcing market.
1. Vietnamese Coffee Prices: A Historical Ascent
In the recent harvest season, Vietnamese Robusta coffee prices have surged to an impressive 65,000-67,000 VND/kg, signaling a remarkable spike compared to the same period last year. Farmers like Mr. Nguyen Van Tao from Dak Nong are witnessing a doubling of prices despite a slightly lower coffee yield this season.
Cultivating over 6 hectares of coffee, Mr. Tao estimates a profit of approximately 240 million VND/ha with the current market prices. Subtracting costs, this results in a net profit ranging from 120-130 million VND/ha.
2. Vietnamese Coffee Market Landscape
Coffee prices in key provinces such as Lam Dong, Dak Lak, Dak Nong, Gia Lai, and Kon Tom have surged to 66,000-67,300 VND/kg.
In early December, the coffee hub of the Central Highlands began its harvest season, witnessing a significant uptick in domestic Robusta coffee prices. The market is poised to touch historical highs of 70,000 VND/kg.
3. Global Coffee Market Trends
World coffee prices, especially Robusta and Arabica, are on the rise due to unfavorable weather conditions in coffee-producing regions such as Brazil.
The global coffee market experienced notable fluctuations in mid-December, with Robusta coffee prices hitting their highest point in 15 years. Farmers in major producing countries are holding back on new harvests, contributing to a sustained increase in prices.
As of the latest data, Robusta coffee prices in London for January 2024 delivery are recorded at 2,857 USD/ton. Arabica coffee prices for March 2024 delivery in New York stand at 189.30 US cents/pound.
4. Vietnamese Coffee Exports and Prices
In November, the average export price of Vietnamese coffee reached 2,990 USD/ton, marking a 26.2% increase from November 2022.
Despite a 10.4% reduction in coffee export volume over the past 11 months, the increased prices have led to a 0.4% rise in export value, with Vietnam exporting 1.41 million tons of coffee, earning 3.64 billion USD.
5. Challenges and Predictions for the 2023-2024 Coffee Season
The ongoing coffee harvest for the 2023-2024 season faces challenges, with adverse weather conditions impacting global coffee supply. Climate change and unpredictable weather patterns are expected to significantly affect both coffee productivity and quality.
Forecasting a continued rise in coffee prices due to supply shortages, Vietnam is entering the harvest season with potential concerns. European demand remains high, predominantly relying on Vietnamese Robusta coffee, at least until April 2024.
6. Impact on Vietnamese Coffee Production and Exports
With reduced coffee cultivation areas in key regions, the 2023-2024 season anticipates a decrease in Vietnamese coffee production to approximately 1.6-1.7 million tons. Coffee export estimates for this season suggest a further decline to around 1.4 million tons.
Industry experts predict that Vietnamese coffee prices may continue to rise and could reach their peak in 2024. However, by May, or even as early as April 2024, coffee shortages may impact businesses’ ability to procure the commodity.
Navigating the Vietnamese Coffee Market Challenges
In conclusion, the surge in Vietnamese coffee prices is a reflection of the complex interplay between global factors and local dynamics. As buyers navigate this challenging market, staying informed about price trends, global coffee scenarios, and potential supply shortages becomes paramount for making strategic sourcing decisions.