Oversupply pressure
The world coffee acreage, productivity and output have increased highly in recent years, while the demand has only increased from 2 to 2.5% per year, resulting in oversupply. In April 2020, the supply was still plentiful, but due to the outbreak of Covid-19, countries applied quarantine measures, closed coffee shops, and the demand for consumption decreased, causing the price of Robusta and Arabica coffee to drop. low level, putting pressure on coffee prices in domestic and foreign markets.
According to the Center for Information and Trade – Ministry of Industry and Trade (VITIC), on May 6, 2020, the price of coffee beans in key regions of the Central Highlands rebounded to 100 VND, closing at 30,500 – 30,900 VND / kg. . The lowest is in Lam Dong and the highest in Dak Lak, the rest of the provinces are at 30,800 VND / kg.
At the port of Ho Chi Minh City, export coffee type 2, the rate of 5% broken black is pegged at 1,280 USD / ton (FOB), except at +80 USD / ton. It is forecasted that global coffee prices in the near future will fluctuate in a downward trend.
According to the Import and Export Department, coffee exports in April 2020 are estimated at 170 thousand tons, worth $ 280 million, stable in volume, but down 0.5% in value compared to March 2020; up 18.9% in volume and 15.4% in value compared to April 2019.
Generally for the first 4 months of 2020, coffee exports reached 659 thousand tons, worth $ 1,115 billion, up 4.5% in volume and 2.2% in value over the same period in 2019.
The average export price of coffee in April 2020 is estimated at 1,647 USD / ton, down 5% compared to March 2020 and 3% lower than that of April 2019. Generally for the first 4 months of 2020, the average export price of coffee reached 1,692 USD / ton, down 2.2% over the same period in 2019.
In the domestic market, coffee prices continued their downward trend, while transactions in the domestic market were still slow. In April 2020, domestic coffee prices fell to a record low.
Specifically, on April 28, 2020, coffee prices decreased from 0.3 to 1.0% compared to April 18, 2020 in most surveyed provinces / districts, but stabilized in Dak Ha district, province. Kon Tum. Compared to March 31, 2020, coffee prices also decreased from 0.3 to 1.0% in most of the surveyed provinces / districts, but stabilized in Cu M’gar district.
In the port area of Ho Chi Minh City, Robusta coffee grade R1 both decreased by 1.0% compared to April 18, 2020 and compared to March 31.
Covid-19 husband added difficulty
The International Coffee Organization (ICO) said that the spread of Covid-19 added a significant challenge to the global coffee industry, which has experienced a long period of low prices. It is expected that the global coffee market will have a surplus of 1.95 million bags (60kg type) in crop year 2019/20, due to the impact of the Covid-19 pandemic, previously forecast a shortage of 474,000 tons. Global coffee exports fell 3.7% in March from a year ago to 11.06 million bags.
Currently, coffee prices have experienced a downward trend since 2016, down 30% below the 10-year average. Many of the world’s 25 million farmers, mostly smallholders, are struggling to cover all the costs of living while farm incomes are falling but input prices continue to rise.
The fact that the above balance is unfavorable makes the growers reluctant to invest more in coffee gardens, which risks seriously affecting the future sustainability of the industry and coffee supply.
According to Mr. Luong Van Tu, Chairman of the Vietnam Coffee – Cocoa Association (Vicofa), Covid-19 epidemic has spread around the world, of which Europe is the place most heavily affected. In order to reduce the spread of a lot of water, a quarantine or a spacing method is applied, so many coffee shops are closed. However, without coming to the restaurant, consumers can still drink coffee at home, so world demand has not decreased, and Vietnam’s coffee export results in the first 4 months of the year have increased. light.
“In May or June, if the quarantine was removed and the cafes were reopened, but it took 2 or 3 months for all operations to return to normal. Thus, it is forecasted that coffee exports in the second quarter of 2020 will remain at the level of the first quarter, only when the operations of cafes return to normal, the demand will increase.
However, because domestic coffee prices are currently at their lowest compared to 10 years ago, many coffee gardens in the Central Highlands have reduced the density of trees in the coffee garden to intercrop with other crops leading to the number of trees. coffee / hectare decreased. Dak Lak province alone has converted 100,000 hectares to grow fruit trees ”, said Mr. Tu.
