Smaller crops: A worker dries coffee beans in Dak Lak, Vietnam. Industry insiders say supply-chain disruptions have led to high prices. — AP
HANOI: Coffee prices, both domestically and internationally, are continuously hitting record highs due to unfavourable harvests in Vietnam and Brazil, prompting a close watch on major coffee-producing countries.
Domestic coffee prices have now surpassed 130,000 dong per kilogramme, exceeding the price of black pepper.
Robusta coffee prices in Dak Lak Province were quoted at 103,000 dong per kilo last Friday, while in Lam Dong Province it was 102,500 dong a kilo.
Statistics from the General Department of Customs showed that as of April 15, Vietnam exported about 660,000 tonnes of coffee, with a value of over US$2.23bil. The average export price of coffee in the first quarter of 2024 reached US$3,289 per tonne, a 48% gain from the same period last year.
However, in the first half of April alone, the average export coffee price soared to US$3,790 per tonne.
Prices are rising amid the supply of Vietnamese coffee that is gradually decreasing, according to the Vietnam Coffee-Cocoa Association (Vicofa).
Stockpiles in businesses and among farmers are low, resulting in a reduction in export volume from now until the end of the crop season.
Do Ha Nam, vice-chairman of Vicofa, said that in the first six months of the 2023-2024 coffee crop, which is from October 2023 to March 2024, Vietnam exported 956,000 tonnes of coffee, with a total value of over US$3bil.
As a result, the country has exported approximately 60% of the estimated total production of around 1.6 million-1.7 million tonnes for the current crop season.
With current domestic coffee prices, coffee farmers in the Central Highlands of Vietnam stand to benefit if they have stockpiled inventory. However, many farmers regret not having any stock left to sell. The limited market supply makes it challenging for enterprises to find coffee.
Le Duc Huy, general-director of coffee exporter Simexco Daklak said that farmers’ plantation restructuring has affected the domestic coffee supply. While some farmers still have supply, it is scarce.
“Predicting future coffee prices is challenging as the new harvest season is six months away,” Huy added.
According to Huy, many businesses are hesitant to sign contracts if they cannot secure a stable source of supply. Most businesses have already made their purchases as they anticipated difficulties in production volume.
With the current sharp price increase, buyers are more cautious and will only make purchases when absolutely necessary.
Nguyen Nam Hai, chairman of Vicofa, said that coffee prices have never been as high as they are this year. The surges have capped the purchasing capacity of businesses and have led to supply-chain disruptions for those involved in long-distance buying and selling, while future contracts carry a high level of risk.
While Vietnam’s new coffee harvest is expected in October, the current severe drought conditions in the Central Highlands are causing concerns among farmers for the upcoming crop’s volume.
Despite the high costs for coffee plants due to expensive fertilisers and ongoing drought conditions increasing irrigation expenses, many farmers who had previously neglected coffee cultivation are now returning to invest in it.
Moreover, concerns about supply shortages due to prolonged hot and dry weather in major coffee-producing countries in South-East Asia, including Vietnam, have pushed the price of Robusta coffee futures on the London market above US$4,000 per tonne. This is a record high since coffee futures trading began in 2008.
Robusta coffee futures closed last week at US$3,555 per tonne, down 21.8% from the peak of US$4,546 hit on April 25, but is still up 18.2% from the beginning of the year. — Viet Nam News/ANN
