At the end of the week, Robusta coffee prices closed up compared to the previous week, at $4,376 compared to $4,279/ton, an increase of nearly $100/ton based on January 2025 prices.
Meanwhile, December Arabica coffee price closed at 253.35 cents, up 10.4 cents compared to last week, closing at 242.95 cents/pound.
Reviewing the notable factors that helped coffee prices, especially Robusta, recover after 5 consecutive weeks of decline is the FED’s 0.25% reduction in interest rates on November 7 last week. causing the USD index to drop sharply and pushing up purchasing power for coffee prices. In addition, developments in the US Presidential election also contributed to shaking the currency market, affecting commodity prices.
Last Thursday, Arabica coffee prices rose to their highest level in 3 weeks and Robusta coffee prices reached their highest level in 1 week due to concerns that unusually dry conditions in Brazil could limit coffee output. of this country.
Somar Meteorologia reported on Monday that rainfall in Brazil’s largest Arabica growing region, Minas Gerais, reached just 27.4 mm last week, just 64% of the historical average. .
Robusta coffee prices are also supported by concerns that there will be heavy rain due to the impact of Storm No. 7 in the East Sea named Yinxing when it lands in Vietnam, which will affect the harvest in the Central Highlands, however However, the complex path of the storm does not seem to affect the Central Highlands and will likely dissipate at sea before making landfall.
However, one day later, the coffee market returned to reality with information such as: The International Coffee Organization (ICO) reported on Friday that global coffee exports in September increased by 25% compared to With the same period last year reaching 10.76 million bags, exports by season also increased by about 11.7% over the same period last year to reach 137.27 million bags.
The ICO report also reflects an increase in exports from South America in September, recording a 30.80% increase to consumer markets, when compared with the same period last year. This is the end of the coffee year from October 2023 to September 2024, when ICO reported South American exports totaled 66.13 million bags, up 30.70% over the previous year .
Brazil and Colombia were the main sources driving export growth during the coffee year.
The report confirms the increase in exports from Asia as Vietnam, India and Indonesia cumulatively recorded an export increase of 19.60%, compared to the same period last year. Reaching a total of 40.62 million bags.
Exports from Africa are said to have increased 14.30% year-on-year to a total of 1.37 million bags in September.
The amount of certified graded Arabica coffee stored on the New York exchange fell by 3,480 bags on Thursday, to 854,963 bags.
The difference between the December 2024 contract Arabica price and the January 2025 Robusta price widened over the weekend, currently at 56.92 Usc/Lb. This number reflects that Robusta coffee is losing value compared to Arabica.
Although coffee closed the weekend session down 2% after the announcement of increased global exports, analysts still pointed out that fundamental factors still support prices.
On Friday, in an interview on the Brazilian Agriculture website Notícias Agrícolas, Eduardo Carvalhaes, an analyst at Carvalhes Office, highlighted the good performance of Brazilian exports, as he emphasized. , reached 5 million bags this October.
However, even with the availability of coffee on the foreign market, Carvalhes claims that there will then be no abundant supply on the market and the trend for this scenario is to support prices. He said Brazil is about to emerge from a six-month drought that has depleted coffee plantations and destroyed much of next year’s production potential, after a 2023 as well as climate problems that led to the decline in 2024.
“We will continue to see a lot of volatility, but with no more coffee on the market, price trends remain highly stable. Despite good exports from Brazil in recent times, coffee growers are now stopping and waiting to see what coffee output will be like after flowering. “We will have a definite answer about what the next crop will be by the end of February to the beginning of March,” Carvalhaes added.
According to some other sources about Brazil’s weather/output situation:
According to estimates by CONAB (Agency of the Brazilian Ministry of Agriculture), Brazil’s coffee production peaked in 2020. If this trend continues, this year will mark the fourth consecutive year of decline in the country’s output. from the top.
Brazil is likely to face another challenging harvest in 2025, due to one of the worst droughts in recent memory. Anyone who has passed through this country’s unirrigated coffee plantations can attest to that.
In recent years, the direct link between coffee yields and climatic conditions has become the industry’s weak point, affecting both producers and consumers.
Meanwhile in Vietnam – High prices promote growth in Vietnam’s coffee area and productivity
The export supply of robusta in Vietnam is not enough, leading to continuously high prices. This fluctuation caused robusta coffee to reach a record level, never seen in more than 30 years in the actual domestic trading market. This narrows the futures price gap between robusta in London and arabica in New York, sometimes falling below 20 cents/pound. Thanks to this record price, even with an export volume of less than 1.5 million tons (25 million bags) in the 2023/24 crop, revenue from coffee exports has reached a record $5.43 billion America, according to the Vietnam Coffee and Cocoa Association (VICOFA).
At the beginning of the 2024/25 season, coffee prices are still very high compared to previous years. The harvest has just begun, only 5% has been harvested and work will continue until the end of the year. Despite heavy rain, storm Tra Mi did not cause any problems in the Central Highlands, the main growing region. Vietnam’s coffee output is expected to reach about 26 to 27 million bags, including 24 to 25 million bags of robusta. This is lower than the US Department of Agriculture’s preliminary forecast, which was expected to be 29 million bags, including arabica and robusta.
According to Vicofa, by the end of 2023, the country’s total coffee growing area has increased to 718,000 hectares and will continue to expand in 2024, as demand for coffee seedlings continues to increase. The average yield of Vietnamese coffee trees increases from 2.7 to 2.9 tons/ha in 2023, an increase of 0.8% over the past 3 years. This production scenario, if the weather is favorable, will start to bear fruit in the next few years, which could significantly boost robusta supply from Vietnam.
Kinh Vu (giacaphe.com)
