Tran Van Quan from Dinh Trang Hoa, Di Linh district sent to Y5Cafe the question “Should you hug coffee, borrow money to invest and wait for high prices?“, realizing that this is also a common “thought” of the people, the Board of Directors would like to post it and hope to receive the sharing from you.
Your question Quan:
“My house in Dinh Trang Hoa (Di Linh) last year harvested more than 10 tons of coffee. Reading the information, we all see that the last crop of Vietnamese coffee has lost a heavy crop, in addition to the unfavorable situation from the drought in Brazil, the coffee crop of Indonesia is not very good.
In my area, everyone said that this year at least the price of coffee must be more than 50,000, reading a lot of information along with the discussion of people around the neighborhood makes me so confused. In the immediate future, how much money is needed, which is irrigation, fertilizer and a little debt that the agent is claiming.
So according to you, if the price of coffee over the new year is more than 50,000 VND, now I go to borrow money to cover the short term and wait for the price to increase to close, it is still much more profitable than selling coffee now. How do you see?
The bad thing is that no one can predict the price of coffee tomorrow, thinking and wondering just because they want to earn a little more for a miserable coffee season. Too many opinions, so it’s confusing. I can only get that much for the whole year, more than 2.5 hectares need to be invested for the next season, so I hope Y5Cafe forum Post your comments for our relatives to share with each other and advise you.
Thank you forum.
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Y5Cafe would like to quote some outstanding feedback from the community:
Nong Ca’s reply:
Borrowing from a bank to spend or hoard coffee will have 2 cases:
1 – Coffee price goes down: bank interest (A) + lost coffee price (B) = LUCK A+B.
2 – Coffee price goes up: portion of coffee price goes up (A) – bank interest (B), If A > B = ERROR; A
Apply: calculated on 1 ton of coffee
– current coffee price: 41 million/ton (not for sale)
– Bank loan interest 41 million: 41 million x 0.7% / month = 287 thousand / month (rounded to 300k)
Interest after 7 months of borrowing (from February to September): 300 thousand x 7 months = 2.1 million.
So by September, if selling coffee at a price of 43.1 million/ton, it will break even. (Assuming the interest does not change, rounding to 300k to calculate the ‘parental interest’)
The rest is up to you to decide! because nobody knows WHAT’S TOMORROW! because if they knew, everyone would be RICH!
Answer from Mr. Pham Vy:
Seeing that my relatives and friends exchanged too much, I also .. intervened a bit.
In the coffee trade, there is a phrase “tree island” and tree island is understood as follows.
1. Buy 10 tons of coffee (or have 10 tons of coffee):
Week 1: price 40
Week 2: price 39 (1k loss)
Week 3: price ..36 (4k loss)
Week 4: price 50 (profit 10k).That is, having coffee in hand but not sure whether tomorrow will be a profit or a loss.
* Case A: Random profit and loss
– Need money, Week 2 sold and lost 10 million VND
– No need for money, Wait until the 4th week and then sell at a profit… 100 million VNDIn this case, you have not charged the storage fee or the “administrative fee” that Westerners call it [live cost]
*Case B: Surely profit or loss
-Sell 10 tons every day and .. buy back 10 tons according to the principle: buy 1, sell 1.1 if you are lucky… as soon as the price leaves in Week 4, you will definitely profit.
-So buy 1 sell 1.1 why no profit??? that 0.1 difference is covered by your own management fee or Live cost.
Of course, this is just theory. In fact, winning or losing depends on your calculation and “feeling” talent
A few words to share
Pham Vy
