Amidst the global trade currents, Vietnam’s coffee export market is nothing short of a dynamic powerhouse. Despite facing challenges, the country’s coffee sector is steadfastly navigating towards new peaks. With the Ministry of Agriculture and Rural Development’s projections, coffee exports for the year 2023 are anticipated to hit approximately 1.72 million tons, generating a revenue of $4.2 billion. This projection suggests a potential new record in export value, an increase of $200 million compared to the previous year’s record figures.
Vietnam’s Coffee Export on Track to Reach New Heights in 2023
This optimistic outlook has coffee farmers in high spirits, primarily due to the favorable market prices this year. However, it’s crucial to dissect the September 2023 export statistics that indicate a decrease of 23.2% in volume and 20.8% in value compared to August 2023. When paralleled with September 2022, the exports experienced a dip of 32.7% in quantity and 12.8% in value. Yet, this decline in volume is juxtaposed with a remarkable rise in export revenue.
In Q3 2023, Vietnam exported 259,000 tons of coffee, raking in $774 million. This represents a 20.8% decrease in volume but a 0.4% increase in value compared to the same period the preceding year. The cumulative exports in the first nine months of 2023 were estimated at 1.266 million tons, worth $3.16 billion, showing a 7.3% decrease in volume but a 1.9% increase in value year-on-year.
These figures underscore a vital narrative: while there’s a reduction in exported volume, the value garnered from these exports is on an uptrend. This is attributable to a strategic shift towards value addition and quality enhancement in the coffee export portfolio. Despite a reduction in raw coffee exports compared to 2022, there’s been an uptick in processed coffee exports.
In 2022, Vietnam’s coffee exports surpassed the $4 billion mark for the first time, thanks to the third-highest export volume in a decade at 1.78 million tons. September 2023 saw the average export price per ton of Vietnamese coffee reach $3,151, a 3.2% increase from August 2023 and a significant 29.6% surge from September 2022. The average export price over nine months stood at $2,499 per ton, up 9.9% year-on-year.
A pivotal factor in this scenario is the 2022 export thrust, which left a diminished stockpile for 2023 exports. Compounding this was a 10-15% drop in the 2022/2023 harvest due to unfavorable weather conditions. Nonetheless, a 10% rise in export prices compared to the previous year cushioned the impact of reduced export volume, ensuring a slight increase in export value.
The domestic market also mirrors this positive trajectory, with local raw coffee prices reaching a 30-year high at one point, surpassing VND 68,000 per kg. Even with a slight decrease to a range of VND 64,200 – 64,600 per kg, these remain favorable prices.
Coffee Market’s Long-term Prospects
Strategic initiatives towards sustainable production, quality enhancement, and certified production processes are factors driving the upsurge in coffee export prices. Gia Lai province, for instance, is intensifying its efforts in high-value coffee development, aiming for sustainable progress by 2030. With a roadmap to expand specialty coffee cultivation to around 1,200 hectares by 2025 and 2,300 hectares by 2030, the region is poised for substantial growth.
In light of the EU’s impending ban on coffee cultivated on deforested lands, the Vietnam Coffee-Cocoa Association emphasizes the need for stringent controls to prevent deforestation for coffee cultivation. The EU remains a critical consumer of Vietnamese coffee, making compliance with environmental standards imperative.
While the first nine days of October 2023 witnessed a downturn in global and Vietnamese coffee prices, there’s anticipation for a market rebound. Fluctuations are partly due to speculations about the US Federal Reserve’s monetary policy and the Brazilian Real’s depreciation, prompting increased coffee exports from Brazil.
Despite these challenges, Vietnam’s coffee sector’s resilience is unwavering. With robust strategies, commitment to quality, and adherence to global standards, the country is not just eyeing new records — it’s setting the stage to achieve them. For buyers and investors worldwide, this presents a golden opportunity to partake in Vietnam’s thriving coffee market.