Why Are Vietnam Coffee Prices Climbing Right Now?
Vietnam's Robusta coffee prices have risen to an estimated 72 million to 73 million Vietnamese dong per ton, up from 71.5 million to 72.5 million, according to the Vietnam Coffee and Cocoa Association. Global inventories are thin, with Robusta stocks under 30,000 tons, and Red Sea shipping disruptions add two to three weeks to transport times, pushing some buyers toward Brazil.
Farmers holding back sales have made it hard for traders to fill contracts. An agent in Dak Nong Province declared bankruptcy over nearly one million dollars in undelivered goods. Brazil's overall exports slipped 0.4% in 2023, yet its robusta coffee bean shipments jumped 212%, helped by volumes to China more than tripling, while India's exports may grow up to 10% in 2024.
A recent report from the Vietnam Coffee and Cocoa Association shows that Robusta coffee prices are continuing to rise, with an expected price of 72 million to 73 million Vietnamese dong per ton, up from previous levels. Global inventories are low, with Robusta stocks below 30,000 tons, and Arabica also at low levels, stemming from reduced production in many countries leading to declining exports. The Red Sea situation is disrupting transportation, driving up freight rates, and some buyers are turning to Brazil for purchases. Meanwhile, Vietnamese farmers are holding back sales and waiting, making it difficult for traders to fulfill contracts. Mai Cau, an agent in Dak Nong Province, has declared bankruptcy, involving nearly one million dollars in undelivered goods. This article will provide an in-depth analysis of market dynamics, export data, and future expectations to help coffee enthusiasts grasp market changes.
The latest report from the Vietnam Coffee and Cocoa Association points out that, due to a combination of multiple factors, Vietnam's Robusta coffee prices have risen, with recent estimated prices between 72 million and 73 million Vietnamese dong per ton, compared with the previous 71.5 million to 72.5 million Vietnamese dong.
Coffee inventories in the international market are at low levels, with Robusta stocks below 30,000 tons, and Arabica coffee inventories also falling to their lowest point. The low inventories are mainly attributed to reduced coffee production in various countries, which in turn has led to a decline in export volumes. Cecafé said that Brazil's exports fell by 0.4% in 2023, but the organization also stated that although there was an overall decline compared with the same period last year, Robusta coffee exports increased by 212%, mainly thanks to the more than tripling of volumes shipped to China in 2023. In addition, India, as a Robusta-growing country, has reports that its coffee exports may grow by as much as 10% in 2024, because global price increases are prompting European buyers to pay premiums to increase purchases from India.
At the same time, the Red Sea issue continues to intensify, disrupting coffee transportation times, with shipping requiring an additional two to three weeks. Some shipping companies can only choose to suspend operations or reroute via the Cape of Good Hope, and are considering imposing a "war risk surcharge." In addition, reports indicate that some coffee buyers are avoiding importing Robusta coffee beans from Vietnam. Because Houthi armed forces are attacking ships in the Suez Canal, freight costs for imports from Vietnam have increased, and many importers have turned to buying Robusta coffee beans in Brazil because sea freight is cheaper and the time shorter. Moreover, the response plans of the United States and the United Kingdom have been ineffective and have instead made the situation worse.
In addition, because Robusta coffee prices have risen, Vietnamese farmers do not want to easily sell the coffee beans they hold. These coffee farmers are waiting and watching, hoping to sell only when prices rise even higher. This has therefore caused traders to encounter major difficulties in fulfilling sales contracts.
According to a Vietnam Net report, coffee agent Mai Cau in Dak Nong Province has declared bankruptcy. According to company owner Tran Thi Mai, there are nearly 1 million dollars in undelivered goods, so it plans to settle the outstanding debts in the subsequent process. The main reason for this debt problem is that traders had already signed pre-sale contracts with coffee buyers, but some Vietnamese coffee farmers were unwilling to sell the coffee beans in their possession to traders, ultimately leaving traders unable to fulfill sales contracts and forcing them to pay compensation. If they choose to buy at a higher price, they will also incur losses.
Earlier, the Vietnam Coffee and Cocoa Association already explained that in November, Vietnam exported 120,000 tons of coffee beans, but half of that was to fulfill orders from the previous crop season, and it is expected that about 8-15 tons of coffee beans this year may not be delivered on schedule, and payment can only be made after the next crop season.
The above content is compiled by CoffeeHunters, a coffee news website.
