(HSV VIETNAM GROUP) – Coffee growers had a successful crop when prices were high at harvest time and continued to increase afterward. The coffee industry is forecast to continue to have a year of price benefits.
Harvesting coffee in the Central Highlands.
Mr. Le Huy Quang - living in Bao Loc city, Lam Dong province - said his family grows 1 hectare of Robusta coffee, harvested in November 2023 with more than 3 tons, priced at 60,000 VND/kg. Recently, traders increased the purchasing price up to 70,000 VND/kg.
Unprecedented high interest rate
According to Mr. Quang, with a coffee price of 70,000 VND/kg, gardeners profit 130 - 140 million VND/ha - an unprecedentedly high profit. Therefore, the wave of intercropping fruit trees such as durian, avocado, passion fruit... in coffee gardens also decreased. Many farmers continue to expand their coffee gardens because they expect to continue winning in the following years.
"With prices from 60,000 VND/kg, farmers will prioritize coffee care because of its stability and low risk compared to many types of fruit trees" - Mr. Quang commented.
In Kon Tum province, Ms. Le Thi Hanh said she had just sold 12 tons of coffee for 73,000 VND/kg. She "couldn't believe" this price in her decades of growing coffee. Last season, Ms. Hanh harvested 15 tons of coffee but only sold it for 45,000 VND/kg. This year, output decreased but high prices compensated for it, so the profit was more than 100 million VND/ha. Profits are still low because her family has no employees and has to hire outsiders...
According to the Import-Export Department - Ministry of Industry and Trade, in 2023, Vietnam's coffee exports will decrease by 8.7% in volume but increase by 4.6% in value compared to 2022 (reaching 1.62 million tons, worth 4.24 billion USD). In December 2023 alone, our country's coffee exports reached 207,610 tons, worth nearly 599.42 million USD - compared to December 2022, an increase of 5.4% in volume and an increase of 40.8% in value, showing that coffee prices have established a new level.
The Ministry of Agriculture and Rural Development forecasts that coffee output in the 2023-2024 crop year may decrease by 10%, to 1.656 million tons - the lowest crop in 4 years, due to unfavorable weather. Although the harvest is in full swing, the supply is not as strong as in previous years. People tend to limit selling to wait for prices to increase, pushing up domestic coffee prices continuously.
"In 2024, Vietnam's coffee industry will continue to benefit because Robusta coffee prices will increase, possibly reaching a peak due to concerns about supply shortages" - the Import-Export Department commented.
Both happy and worried
While growers are happy because coffee prices are rising, many processing businesses are having headaches because of the continuous increase in raw material prices.
Mr. Nguyen Ngoc Luan, Director of Global Trade Link Company Limited (Meet More coffee brand), said that in some batches, businesses have to buy raw materials for 85,000 - 90,000 VND/kg. Meanwhile, the price of finished coffee products has been fixed in advance.
"Currently, the purchasing power in the market is still weak, so businesses cannot increase prices corresponding to the cost price. The export market is also slow, shipping rates are high, so orders are few. Every year, at this time, businesses have 5-6 export orders for the new year but this year there are still no orders" - Mr. Luan cited.
According to Mr. Luan, rising coffee prices are good news for growers but also pose a potential risk of unsustainability. Because, when coffee prices increase sharply, linked regions are easily broken due to outside purchasing competition, and focal points prioritize selling raw coffee rather than investing in processing.
"Brazil is the world's No. 1 coffee exporter, but last year's crop failed, so coffee buyers flocked to Vietnam, pushing up prices. However, recent information said that Brazil has improved better coffee varieties, and in a few years there will be a harvest. At that time, Vietnamese coffee will worry about output" - Mr. Luan wondered.
Coffee market expert Nguyen Quang Binh said that many people often say high coffee prices are due to crop failure and lack of output. However, currently, Vietnam has just finished harvesting so it is difficult to say the reason for the lack of goods.
"Many people expect prices to continue to increase, limiting sales, causing those in need to buy at high prices. In addition, due to the impact of conflicts in the Red Sea, shipping freight and increased shipping times have caused coffee reserves for production in Europe and the US to dry up, pushing coffee prices up at this time" - Mr. Binh analyzed.
Mr. Binh believes that the domestic coffee price at 73,000 VND/kg may have peaked. Because the price of domestic coffee is increasing rapidly, there is a situation where coffee changes hands in the market and pushes the price up, but businesses have not been able to export it at a high price.
"When the price of Robusta coffee is too high, Brazil may push the amount of goods for domestic consumption to export, while the country processes low-grade Arabica goods. At that time, world coffee prices will lose their upward momentum" - Mr. Binh commented.
Export prices increased
The Import-Export Department said that for the whole year 2023, Vietnam's average coffee export price reached 2,614 USD/ton, an increase of 14.5% compared to 2022.
According to records on January 18, 2024, the price of Robusta coffee on the London exchange for January delivery is 3,150 USD/ton; March delivery term is 2,964 USD/ton; May delivery term is 2,845 USD/ton and July delivery term is 2,770 USD/ton. The reason long-distance delivery terms have low prices is because from April 2024, Brazil enters the harvest season, the world coffee supply will improve.
Ha Diem HSV