In the past trading week, red dominated the price list of industrial raw materials. Among them, coffee and cocoa attract special attention when there is a sudden increase.
In the coffee market, Arabica prices have skyrocketed nearly 12% to more than 6,200 USD/ton, the strongest weekly increase in nearly 8 months, while also setting a new peak in more than 13 years. Robusta coffee prices also increased more than 9% to nearly 4,800 USD/ton, the second consecutive week of increase, to the highest level within a month.
The results of the US Presidential election with the victory of Mr. Donald Trump have created positive expectations for the financial market as well as the US economy. This causes speculators to shift cash flow from highly sheltered markets such as precious metals to highly profitable speculative markets such as coffee. This is the main reason supporting the sharp increase in coffee prices.
Besides financial factors, basic information about supply and demand in the market also had new changes, contributing to the increase in coffee prices last week. In Brazil, although rain has returned since October, the rainfall is lower than the historical average, causing analysts to worry that the 2024-2025 coffee crop will not be able to fully recover from the damage from the sunny spell. record heat during the critical flowering period.
Consulting firm StoneX predicts that Brazilian coffee output in the 2024-2025 crop year will decrease by 0.4% compared to the current crop, mainly due to the decline of Arabica coffee under the influence of drought. Accordingly, the South American country’s Arabica coffee output in the next crop will decrease by 10.5% compared to the previous crop, down to 40 million 60 kg bags.
In Vietnam, concerns about the weather stem from the forecast that La Nina will begin operating in the last months of this year in the Central Highlands, the largest coffee growing region in our country. La Nina can cause more rain and floods than usual, disrupting coffee harvesting activities of farmers.
Notably, after a 2-day meeting held on November 13-14, the European Parliament (EP) approved postponing the implementation of the EUDR Anti-Deforestation Regulation for another 12 months, like the previous proposal. of the European Commission (EC). The EP also sought to ease import bans on goods such as beef and soy linked to deforestation. Delaying the start of EUDR implementation is expected to limit the push to buy coffee from major importing countries in Europe as in the past, causing prices to adjust slightly at the weekend session.
In the domestic market, recorded this morning (November 18), coffee prices in the Central Highlands and Southeast fluctuated between 112,800-113,400 VND/kg. Compared to the same period last year, coffee prices are now nearly double from 60,200-61,000 VND/kg. Since the beginning of the year until now, coffee prices have increased by more than 45,000 VND/kg from 67,500-68,400 VND/kg.
Another notable development in the industrial raw materials market last week was the sudden increase in cocoa prices of nearly 22% to more than 8,500 USD/ton, the second largest weekly increase in the past 44 years. In addition to support from inter-market cash flow shifts, concerns about cocoa supply capacity in Ivory Coast have pushed prices up.
It is known that the country’s cocoa export contract sales for the 2024-2025 crop year have decreased by 40% due to bad weather conditions causing concerns about production. The slowdown in export contracts may cause concerns about the amount of cocoa arriving at ports in the period January-March 2025. Currently, the amount of cocoa arriving at ports in October and November is increasing, so there is a potential risk of a sharp decrease in December 2024 and early January 2025.
