The relentless surge in coffee prices has reached unprecedented levels, with green coffee now commanding 98,100 VND per kilogram, marking a staggering 110% increase from the corresponding period last year. This surge has persisted over four consecutive days, culminating in the highest price ever recorded.
In the recent trading session on March 27, the Central Highlands provinces witnessed a further escalation in green coffee prices, climbing by 1,100 VND per kilogram compared to the preceding session, now resting at the historic high of 98,100 VND.
The steep ascent has left many within the coffee industry astounded, with discussions on coffee business forums highlighting the imminent approach to the 100,000 VND per kilogram mark, a stark contrast to the 46,000 VND recorded just a year ago.
Internationally, the trend echoes as Robusta prices on the London floor hit a new pinnacle at 3,521 USD per ton for May delivery, while Arabica prices on the New York floor surged past 4,130 USD per ton, surpassing previous peaks set on March 10.
Ms. Nguyen Loan, a coffee trader based in Dak Lak, has found herself compelled to curtail her purchases as prices soar beyond feasibility. Import-export activities are also witnessing a slowdown in procurement, as exemplified by Ms. Loan’s experience, where previously agreed-upon prices of 70,000 VND per kilogram are now insufficient to secure goods.
Similarly, Mr. Phan Minh Thong, Chairman of Phuc Sinh Group, expressed reluctance in the face of escalating prices, revealing that green coffee is now being offered by dealers at 99,000 VND per kilogram. Consequently, the company’s procurement has been notably diminished, with escalating prices exacerbating potential losses.
This predicament extends to Vietnamese coffee processing and exporting enterprises at large, where the prevailing scenario dictates buying high and selling low, resulting in substantial losses for businesses, with estimates pegging losses in the billions of VND at current price points.
The underlying factors propelling this unprecedented surge, as noted by Chairman of the Vietnam Coffee and Cocoa Association, Nguyen Hai Nam, include dwindling supplies and historically low inventories within businesses. Climate change, compounded by the El Nino phenomenon, has precipitated drought conditions across key coffee-producing regions globally, leading to diminished output. In Vietnam alone, output is projected to decline by 10% in the 2023-2024 crop cycle, owing to growers transitioning away from coffee cultivation during periods of depressed prices.
Moreover, geopolitical tensions in the Red Sea region have amplified shipping costs and other ancillary expenses. Additionally, financial speculation, with coffee emerging as a preferred commodity for investment after oil and gold, has further inflated prices.
In response to the soaring prices, importers are redirecting their procurement efforts to India and Brazil, where Vietnamese goods are comparatively more expensive. However, with Brazil’s upcoming harvest season in April, there’s anticipation that coffee prices may begin to recede.
Despite the challenges, data from the General Department of Customs underscores the resilience of Vietnam’s coffee exports, with the first two months of the year witnessing a notable uptick. Exports amounted to 438,000 tons, raking in nearly 1.4 billion USD, marking a substantial increase in volume and value compared to the same period last year, driven primarily by robust growth in Robusta and Arabica exports.
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Source: Vietnam Insider