Source Nhipsong Kinhdoanh.vn
Associated with the position of output and great influence on the world market, Vietnamese coffee has grown better domestically, expanded deep processing instead of raw export, and thereby shaped a new prospect…
That position and influence are contributing to shaping the movements in the market to come. Vietnam’s coffee output will not increase but tend to decrease, while the amount of deep-processed coffee and domestic consumption is increasing, raw coffee for export will decrease. With a business plan, the world also has a different view of Vietnamese coffee…
Many factors are affecting the overall market
On August 23, the domestic price approached the mark of 49,000 VND/kg, on August 25th, it increased to 49,700 – 50,200 VND/kg. By August 29, coffee prices were flat, stable in the range of 48,300 – 48,900 VND/kg. On the morning of August 30, coffee prices ranged from 48,200 to 48,800 VND/kg. In Lam Dong province, the lowest price of coffee is 48,200 VND/kg, in Kon Tum province, the highest price is 48,700 VND/kg.
In the morning session of August 30, maintaining a downward trend in the world market, the price of Robusta coffee on the London floor decreased by nearly 1.5% (equivalent to 34 USD) to 2,281 USD/ton. The price of Arabica coffee delivered in September 2022 in New York reached 240.5 US cents/lb, down slightly below 1% (equivalent to 1.5 US cents).
Mr. Nguyen Nam Hai – Chairman of the Vietnam Coffee and Cocoa Association (VICOFA) said that after a period of price increase, the price of green coffee in the domestic market is fluctuating due to supply and demand factors and impacts from two countries. London and New York exchanges, plus speculators who have bought too much now want to reduce inventories, so they have to release goods.
Currently, in addition to market factors and supply and demand, coffee prices are also affected by output.
In previous years, Vietnam produced about 1.7 million tons/year and exported about 1.5 million tons/year, but in the past few years, coffee output has not increased but is on a decreasing trend. There are two reasons.
Firstly, according to the latest data reported by the Department of Crop Production, out of nearly 700,000 hectares of coffee in the country, there are nearly 200,000 hectares of pepper and durian intercropping. However, over the years, the intercropping area is still reported as coffee area.
“A few years ago, when the price of coffee was low, when intercropping, farmers prioritized investment and care for durian and pepper trees, because these two plants have higher economic value than coffee, so coffee production Coffee in this intercropping area will definitely decrease.
Although this year’s favorable weather is suitable for coffee trees to grow and give high yields, VICOFA expects Vietnam’s coffee output in the next crop year to decrease by more or less 10% (due to nearly 200,000 hectares of coffee planted in Vietnam). reducing productivity and output, pulling the country’s coffee output down as well).
In the future, Vietnam’s coffee output will not increase and tend to decrease because farmers only focus on durian and pepper trees for higher economic value,” said VICOFA President.
Second, in the last 2 to 3 years, domestic consumption has been increasing, when domestic consumption increases, the amount of coffee for export will certainly decrease.
According to Mr. Hai, in the past, domestic consumption was about 200,000 tons/year, now domestic consumption must be more than 300,000 tons/year and will not stop. VICOFA has also assessed that in recent years, domestic consumption has been increasing, which means that raw materials for export will decrease. This issue raises the question “what is the orientation of exporters in the coming time?”
The outlook for the coffee industry is very good
In the condition that inventories decrease this year, coffee prices increase, the output orientation of the 2022-2023 crop year will also decrease. Thus, the export orientation of the enterprise’s output will certainly have to change, and it must be market-oriented such as calculating the specific export volume, or not signing a contract for long-term delivery.
Secondly, the increase in domestic consumption is very good for the domestic coffee market, but it affects the export volume of green coffee of enterprises, forcing them to recalculate.
In the past two years, the products of deep processing such as instant coffee, roasted coffee… have increased.
According to the summary of the first 9 months of the crop year of VICOFA, the total export turnover of roasted and ground products accounted for about 15%, compared to the total export turnover of the whole coffee industry. This is a big development and combined with domestic consumption shows that the coffee industry’s prospects are very good and it is no longer dependent on the export of green coffee.
Faced with this situation, green coffee exporters need to have a suitable orientation to the output market.
“It is possible that inventories are in a downward trend and the next crop year may also decrease, moreover, when domestic consumption increases, raw materials for export will not be as abundant as in previous years, forcing exporters to Green coffee must have a suitable orientation. For foreign roasters who import Vietnamese green coffee, the calculation is also recalculated. Thereby showing that the prospect of Vietnam’s coffee industry is very good.
Not only Vietnamese exporters have to reorient their business plans for next year and the following years, international roasters will also look at Vietnamese coffee with a different perspective than before.
In the near future, Vietnam will no longer be an exporter of raw coffee because coffee is deeply processed and domestic consumption is growing strongly. It is the above factors that will help the export price of coffee in 2023 to be better than this year,” said VICOFA President.
According to data from the General Statistics Office (GSO), in August 2022, coffee exports of Vietnam – the world’s largest Robusta coffee producer were estimated at 110,000 tons, worth US$257 million. Accumulated in the first 8 months of 2022, it reached 1.2 million tons, equivalent to 20 million bags (60kg type), reaching $2.8 billion, up 39.6% over the same period in 2021. With this increase, the target is USD exports in 2022 will reach in September 2022.
