Tuesday, June 18,2024 - 5:41 GMT+7  Việt Nam EngLish 

Why Vietnamese coffee price increased so dramatically? 

 Tuesday, March 26,2024

AsemconnectVietnam - According to experts' explanations, reason comes from increased demand, supply shortages and transportation difficulties in Southeast Asia.

2024 is forecast to be a successful year for Vietnam's coffee industry, when Vietnam's average coffee export price in February 2024 reached 3,276 USD/tonnes, an increase of 7.4% compared to the price in January 2024 and an increase of 50,000 USD/tonne or 6% over the same period last year. In particular, Vietnam recorded growth in export of the main coffee product, Robusta, with a value of nearly 1.84 billion USD. To explain this success, through sharing with Perfect Daily Grind newspaper, Mr. Ryan Delany - leading investment analyst at Coffee Trading Academy company gave 3 main reasons:
First, due to forecasts of hot weather in key coffee growing areas in Vietnam, many importers are worried about possibility of low Robusta coffee supply for the new crop. Anticipating scarcity, many investors will order larger amounts of coffee for inventory, which pushes up coffee prices sharply.
The second reason comes from reduced competition from Brazil, the world's second largest Robusta coffee producer. Here, excessively dry conditions due to climate change in coffee growing areas have negatively affected some harvests.
Finally, there are logistics costs. The crisis in the Red Sea is severely affecting shipping routes connecting Southeast Asian countries (such as Vietnam and Indonesia) with markets in Europe. This means importers are forced to accept longer transit times or pay higher prices to compensate for increased risk premiums.
On other hand, Arabica coffee, which is a more highly rated competitor than Robusta coffee, is facing risks related to climate change. According to Al Jazeera, Arabica is not only less heat-resistant than Robusta but is also more susceptible to diseases, insects and fungi. Even research in the scientific journal Plos One has shown that, by 2050, 50% of Arabica coffee land will no longer be suitable for cultivation.
On contrary, innovations in coffee farming and production make Robusta an increasingly attractive choice in the eyes of investors. “The quality of Robusta coffee will increase as many of techniques used to produce Arabica coffee are applied, including applying organic practices, harvesting ripe coffee cherries and researching post-harvest processing methods”, - Ms. Sahra Nguyen - CEO of Nguyen Coffee, the first brand in US specializing in importing Vietnamese coffee, shared with Perfect Daily Grind.
Recorded at early morning of March 20, 2024, price of Robusta coffee on the London floor continued to increase slightly compared to the previous trading session, ranging from 3,060 - 3,364 USD/tonne. Specifically, delivery term in May 2024 is 3,354 USD/tonne; Delivery term in July 2024 is 3,260 USD/tonne; Delivery term in September 2024 is 3,187 USD/tonne and delivery term in November 2024 is 3,110 USD/tonne.
Similarly, Arabica coffee prices on the New York floor on morning of March 20, 2024, after many sessions in the red, began to trend up again, but an increase was low, less than 1%. Specifically, delivery term in May 2024 is 183.05 cents/lb; July 2024 delivery period is 181.80 cents/lb; September 2024 delivery period is 181.45 cents/lb and December 2024 delivery period is 180.95 cents/lb.
Domestically, an average coffee price today March 20, 2024 is 94,100 VND/kg, which is considered to be stable and kept at a high level. Out of which, the highest buying price in Dak Nong province is 94,200 VND/kg.

Source: Vitic/ congthuong.vn


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