The end of 2023 and the beginning of 2024 will be much more special when for the first time in history coffee prices will exceed their peak right at harvest time.
“Last year, there was a shortage of goods in June. This year, difficulties in purchasing goods appeared as early as February. Compared to other years where goods were still available until the end of the season, this year is much different. Businesses have to wait another 8 months for the new crop to have goods. They have little to worry about and will have difficulty covering costs in the near future.“, Mr. Le Duc Huy, General Director of 2-9 Dak Lak Import-Export Company Limited (Simexco DakLak) said while domestic coffee prices continuously conquered new milestones.
Back in the middle of last year, coffee prices conquered the 60,000/kg mark, skyrocketing to 70,000 VND/kg after a long time keeping at 40,000 – 45,000 VND/kg. 70,000 VND/kg was recorded as an unprecedentedly high price at that time.
However, the end of 2023 and the beginning of 2024 will be much more special when for the first time in history coffee prices surpass their peak right at harvest time, currently at more than 83,000 VND/kg, up 70% over the same period. last year.
The end of the harvest season means abundant supplies. Normally, if supply increases and demand does not suddenly increase, prices will decrease. However, price movements from the end of November 2023 until now show the rule “Prices fall during harvest” seems not to repeat.
Many factors cause coffee prices to peak
Regarding supply, Mr. Le Duc Huy, General Director of Simexco DakLak, said that in the Central Highlands, the coffee growing area has shrunk because people switched to growing durian, but thanks to productivity still being high, the annual coffee output is still high. today is equal to last year. However, there is a problem that this year’s quantity is lacking due to having to make up for last year’s shortage, thus leading to the shortage of goods coming earlier, right from the first February of the year.
When asked about concerns that farmers hoarding goods and not selling them, indirectly pushing up coffee prices, Mr. Huy said, “About 70% of coffee farmers have sold out, while 30% have not sold because their financial capacity is enough to cover costs.”.
Previously in mid-January, Bloomberg quoted Mr. Phan Hung Anh, CEO of Quang Minh Coffee Trading company, saying that this is the most difficult time since he started working in the coffee field in 1994. .
“I have never seen hoarding at this time of year. Prices of some fruits in coffee-growing provinces have increased and farmers are trying to sell these agricultural products first to cover living and production costs.”, he added.
From an association perspective, Mr. Nguyen Nam Hai, Chairman of the Vietnam Coffee and Cocoa Association, said that there are many factors causing coffee prices to increase, especially prices exceeding the peak right at harvest time.
According to him, a small part of the reason comes from supply when output is estimated to decrease by about 10%. Some households switched to growing durian, so the area decreased.
Some businesses import more goods from other countries to ensure export supply, mainly FDI enterprises.
According to Mr. Hai, the factor that affects coffee prices more is related to the manipulation of financial speculators on the floor.
Mr. Trinh Duc Minh, Chairman of the Buon Ma Thuot Coffee Association, said that this crop year has a serious supply-demand imbalance, causing price fluctuations. Major coffee producing countries such as Brazil, Vietnam, Indonesia, and India are all affected by crop failure, with output decreasing by about 10-15%.
Vietnam’s coffee exports last season decreased to 1.6 million tons, while other seasons usually reach 1.8 million tons. Due to last year’s crop failure, inventory in Vietnam and abroad decreased.
Faced with rising prices, he said there was a phenomenon that he sold a few months ago but did not want to deliver the goods early and wanted to negotiate with the exporter to increase the purchase price. However, this is also a normal phenomenon, similar to every agricultural industry.
Earlier this year, the International Coffee Organization (ICO) said in a report that world robusta coffee had increased to its highest level in 30 years due to concerns about tight supply in Vietnam, the largest robusta exporter. world.
“In Vietnam, traders are still holding back coffee beans in anticipation of higher prices, further exacerbating already tight supply problems in the world’s largest robusta producer.“, ICO said.
Meanwhile, the El Nino phenomenon often causes heavy rains in Brazil and drought in India, negatively impacting coffee output.
>> Learn about the International Coffee Organization – ICO
Demand is very high, small and medium roasters are in a difficult position
“Demand is very high. Small and medium-sized roasters are also in a situation of thirst for goods, but are forced to accept record high prices, in the context of rising freight rates due to Red Sea tensions”, Mr. Le Duc Huy, General Director Simexco DakLak said after observing coffee export data just announced by the General Department of Customs.
Accordingly, Vietnam’s coffee exports in January reached 238,266 tons with a turnover of 726.6 million USD, an increase of 14.8% in volume and 21.2% in turnover compared to the previous month. Compared to January 2023 (a month with many Lunar New Year holidays), it increased by 67.4% in volume and 2.3 times.
This is also the month with the highest export volume of the coffee industry in nearly 13 years and a record high turnover ever.
Cumulatively in the first 4 months of the 2023-2024 crop year (October 2023 to January 2024), Vietnam’s coffee exports reached 564,699 tons (equivalent to 9.4 million 60kg bags), an increase of 20.6%. compared to the same period in the 2022-2023 crop year.
The average export price of coffee in the first month of the year reached 3,050 USD/ton, up 5.6% over the previous month and up 39.6% over the same period last year.
According to Business enterprises
