Why Are Vietnamese Robusta Coffee Prices Setting Records?
Vietnamese Robusta coffee prices have risen again, with expected green bean quotes in the Central Highlands reaching 85 million to 87 million Vietnamese dong per ton, up from 83 million to 85 million and a new record. The Vietnam Coffee and Cocoa Association attributes the rally to lower local production, stronger global Robusta demand, drought in Brazil and geopolitical tensions.
New crops in Brazil and Indonesia are due around April and are expected to ease supply somewhat. Brazil, which mainly used Robusta for domestic consumption and instant coffee exports, has raised its Robusta shipments as Vietnamese and Indonesian output fell. Where are robusta coffee beans grown matters here, because Red Sea shipping disruptions have pushed European buyers toward Brazil, while El Niño weather and rising Indonesian domestic consumption keep the outlook uncertain.
Vietnamese Robusta coffee prices have recently climbed again, with expected quotes for green beans in the Central Highlands breaking previous records, mainly due to a combination of declining local production, strengthening international demand, drought in Brazil, and geopolitical risks. As the new harvest season in Brazil and Indonesia approaches in April, the market generally expects supply conditions to improve. However, weather uncertainty brought by El Niño, the Red Sea shipping crisis, and growing domestic consumption in Indonesia continue to add variables to the outlook. This article will review the supply and demand dynamics of the three major producing regions—Vietnam, Brazil, and Indonesia—and examine the potential impact on brands such as Front Street Coffee on the product side.
Recently, the Vietnam Coffee and Cocoa Association announced that Vietnamese Robusta coffee prices have seen a new round of sharp increases. Factors driving the rally include reduced local production in Vietnam, rising global demand for Robusta, drought in Brazil, and geopolitical tensions. In the Central Highlands, the expected price of green coffee has reached 85 million to 87 million Vietnamese dong per ton, compared with the previous level of 83 million to 85 million Vietnamese dong, setting a new record high.
However, as April approaches, the new Robusta harvest season in Brazil and Indonesia is about to begin, and market supply is expected to improve somewhat. In the past, Brazilian Robusta mainly met domestic consumption and was processed into instant coffee for export, but recently, reduced production in Vietnam and Indonesia and persistently high international Robusta prices have prompted a significant rise in exports of Brazilian Robusta beans.
At the same time, the Red Sea crisis continues. Due to frequent armed attacks near the Bab-el-Mandeb Strait, which connects the Red Sea and the Gulf of Aden, most shipping companies have suspended or adjusted routes from the Red Sea and the Suez Canal to reroute around the Cape of Good Hope, severely impacting Europe-Asia routes and causing traders to turn to Brazil for Robusta purchases.
In addition, Brazil had previously rapidly expanded its coffee tree planting area, and Robusta bean production once rose. However, affected by severe weather triggered by El Niño, the market expects Brazil's 2024/25 Robusta coffee production to decrease by 5% to 10%, to about 22.5 million bags of 60 kilograms each.
On the other hand, Indonesia's Robusta coffee will also begin its new season in April, with the market estimating 2024/25 production at 10.5 million bags, up from 9.7 million bags in the previous year. However, experts from Indonesia's Coffee and Cocoa Research Center point out that El Niño may have a devastating impact on low-altitude growing areas and forests, with high temperatures and drought being especially deadly, and Robusta is mostly distributed in low-altitude areas. In addition, Indonesia's Sumatra Robusta coffee bean production fell sharply by 79% year-on-year in January. Data show that Indonesia's domestic coffee consumption has grown significantly in recent years, and the amount available for export will decline accordingly.
Overall, although domestic coffee prices in Vietnam are rising, traders are still stepping up purchases to secure inventory. Local traders in Vietnam report that demand is strong but supply is tight, and given previous cases of coffee farmers refusing to honor contracts, they are especially cautious in transactions, further increasing procurement difficulties. The market is still hoping that coffee beans from Brazil and Indonesia can increase supply, thereby easing demand pressure.
The above content is compiled by CoffeeHunters, a coffee news website.
