Vietnam Coffee and Cocoa Association Forecasts Lower New Crop Exports

The Vietnam Coffee and Cocoa Association recently stated that exports from the new crop may fall compared with last year. Lower yields and tight farmer stockpiles are among the reasons cited. Vietnam is the world's largest producer of robusta, so any change in its output tends to affect global prices quickly.

Association representatives also said robusta prices are likely to stay high until April next year. Buyers in Europe and Asia continue to show steady demand, while supplies from other origins remain limited. The group advised exporters to watch weather conditions and shipping costs closely during the first half of the season.

Vietnam Coffee and Cocoa Association sent a signal at the 27th Asian International Conference: Due to the triple factors of reduced production, depleted inventories, and rising domestic demand, Vietnam's coffee exports in the 2023/24 season are likely to be lower than the previous year, while export prices are expected to remain high. As the world's largest robusta producer, Vietnam's new-season production is expected to fall to 1.6 to 1.7 million tons. In some areas, farmers have switched to growing avocados because they are more profitable, and the actual planted area may be only more than 600,000 hectares. At the same time, global robusta consumption has increased by 10%, while arabica production has fallen by 8%. The supply-demand gap has pushed up bean prices, and purchasing prices in producing areas once reached a historic high of 60,000 Vietnamese dong per kilogram. Before the new seasons arrive in Indonesia and Brazil next April and May, Europe's demand for Vietnamese robusta will remain firm. Front Street Coffee continues to monitor developments in producing areas and sort out price and supply changes for enthusiasts.

The Vietnam Coffee and Cocoa Association recently pointed out that due to lower production, exhausted carryover inventories, and continuously rising domestic consumption demand, Vietnam's coffee export scale in the 2023/24 season is likely to be lower than the previous season, and export prices will therefore remain at a relatively high level.

The chairman of the Vietnam Coffee and Cocoa Association revealed at the 27th Asian International Conference held in Ho Chi Minh City from December 5 to 6 that, as the world's largest robusta coffee producer, Vietnam is currently in the 2023/24 harvest period, but only about half of the total planted area has been harvested, and the production decline is expected to exceed previous expectations.

He further explained that unfavorable weather conditions combined with shrinking planted area may bring new-season production to between 1.6 and 1.7 million tons, compared with 1.78 million tons in the previous season. Along with lower production, exports are also shrinking—from January to November 2023, Vietnam's coffee exports decreased by nearly 13% compared with the same period in 2022, and the full-year decline may reach 15%.

Vietnamese exporter Intimex Group said that in the south-central coffee-growing areas, the planted area is continuously shrinking. The core reason is that coffee brings only 200 million Vietnamese dong in profit per hectare, while avocados can generate 11.15 billion Vietnamese dong per hectare, more than five times that of coffee, so many farmers have turned to growing avocados. According to data from the Ministry of Agriculture and Rural Development, the country's coffee planted area is about 700,000 hectares, but the actual figure may be only more than 600,000 hectares.

Over the past two years, global coffee supply has shown a clear deficit, and both inventories and prices have been severely affected. In 2023, global robusta bean consumption increased by 10%, while arabica production fell by 8%. Rising demand further pushed up robusta bean prices.

At the beginning of the 2023/24 season, coffee bean prices in the Vietnamese market were already at an extremely high level, about 60,000 Vietnamese dong per kilogram. Such a price level appearing early in the harvest season was unprecedented in Vietnam's coffee history.

It is expected that before Indonesia and Brazil enter their new harvest seasons in April-May, demand from the European market for Vietnamese robusta coffee will remain strong. However, considering Vietnam's lower production, insufficient inventories, and increased consumption in the domestic coffee market, the country may export 1.4 million tons of coffee in the 2023/24 season, lower than in the 2022/23 season. Before Indonesia and Brazil begin their new harvest seasons, robusta coffee bean prices will continue to rise, at least until next April.

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