After a period of accumulation, the price of Arabica and Robusta coffee simultaneously broke to the highest levels in nearly 10 years. This is a good sign for Vietnamese farmers as they prepare to enter the harvesting phase.
According to the Vietnam Commodity Exchange (MXV), in the first half of November alone, arabica coffee futures for March on ice us increased by 9.98% to 230 cents per pound, the highest since January 2012. Meanwhile, the price of Robusta coffee futures in January on ice EU has also increased sharply by nearly 6% and at one point exceeded the $2,300 per tonne mark, the first time since August 2011.
The sharp increase in coffee prices has caused the cash flow of domestic investors to be attracted to this market. According to the MXV Clearing Center, the average transaction value of the two coffee items reached more than VND800 billion persession in the first two weeks of November, That’s up nearly 15 percent from October. Besides speculative cash flow, businesses also actively carry out risk insurance operations when preparing to reach the boiling sales stage. The most active of the year.
Supply problems are the reason for the sharp increase in buying force and pushed up the price of two coffee items in recent times. For Arabica coffee, prices have begun to rise as drought and frost wreak havoc on Brazil’s coffee crop. In its most recent report, Brazil’s National Supply Agency (Conab) cut its estimate of the country’s 2021/22 Arabica coffee production. it fell to 30.7 million bags , down 8% from the last report at the end of May.
Dry weather at the end of last year was the main reason for the decline. So, as the U.S. Meteorological And Hydrology Center (NOAA) forecasts that La Nina weather patterns will strengthen over the next three months, concerns are concerned about the situation. Prolonged droughts in South America affecting coffee production have once again caused buying to increase sharply.
According to the Brazilian Coffee Exporters Association (Cecafé), accumulated in the first 3 months of the 2021/22 year, Brazil’s coffee exports reached 8.817 million bags, down 20% compared to The first three months of the 2020/21 business year. The sharp rise in the Brazilian real in the first half of November also caused brazilian farmers’ sales to slow, raising concerns about supply. Tightened. The Green Coffee Association (GCA) said U.S. October coffee inventories fell to 5.98 million newspapers, down -0.8 percent from the previous month. 2.6% compared to the same period last year.
Besides Brazil, supplies in Colombia, the world’s second-largest producer of Arabica coffee, are also not guaranteed. The Colombian Coffee Producers Association has cut the country’s 2021/22 coffee estimate to 13-13.5 million bags, lower than the 14 million bags. included in previous estimates due to excess rainfall causing lower-than-expected yields. The news supported arabica coffee prices to break resistance and bounce to a nine-year high.
For Robusta coffee, supply is still lower than it was a year ago. Container shortages and a broken supply chain caused by the covid-19 pandemic have caused coffee exports from Vietnam, a coffee-producing country. The world’s largestrobusta, declining.
According to official data from the General Department of Customs, Vietnam exported 99,249 tons of coffee in October, down 1.1 percent from the previous month. In addition, Vietnam’s export accumulation in the first 10 months of this year is also 4.2% lower than the same period last year.
The situation is even worse when in November, heavy rain in the Central Highlands is hindering harvesting and affecting quality. Of coffee beans. This will make the harvest progress slower and the new batch of coffee will not be able to arrive before the end of December this year. The above information has supported and caused robusta prices to climb to record levels in the last 10 years.
Coffee price outlook for the end of the year
In terms of the price of coffee exports, in 2011, it peaked at $2,600 per ton, currently the price of coffee has only reached $ 2,350 per ton, missing $ 250. 2011 peak, so coffee prices still have a door to rise.
Consulting firm Fitch Solutions predicts coffee prices could remain high until 2022, not only because of declining harvests, but also because of “demand.” Coffee, at least in Europe and the U.S., will increase in the coming months, as restrictions to combat Covid-19 are lifted, allowing The cafes have reopened,” Fitch Solutions said. The consulting firm raised its 2022 average price forecast for arabica coffee from $1.25 per pound to $1.50 per pound.
During the coffee harvest season of countries in the southern hemisphere (Brazil, Colombia …) Usually from May to October, Vietnam harvests coffee from November every year until the end of April next year.
The new harvest in the Central Highlands coffee region has begun, the rising price of coffee is making coffee farmers very excited, however, the situation the lack of workers to increase harvesting is no small problem. Coffee growers expect local authorities to take measures soon to support the harvest of the new crop to go smoothly.
Thus, at this time, although Vietnam began to harvest coffee, but was in a position of “alone in a market”, whether it was successful or failed in coffee exports. This time is in the initiative of Vietnamese coffee enterprises, if you know how to regulate reasonable sales and know how to negotiate With partners to achieve the most profitable price contract.
Experts recommend that, taking advantage of the market with good prices as at present, Vietnamese manufacturers should soon promote the introduction of new products the market. Because if it is later, when the Fed raises interest rates, at the same time as Brazil’s output next year could be the season will push down coffee prices.