① Due to the bleak supply prospects in Vietnam, a major coffee exporter, coffee prices are expected to continue to soar, and the hoarding phenomenon and bad weather have exacerbated supply constraints in Vietnam; ② Due to Vietnam's supply shortages, London Robusta coffee futures prices have risen by about 50% this year, reaching the highest level in at least 16 years.
AFP, April 26 (Editor: Xia Junxiong) Due to the bleak supply prospects in Vietnam, a major coffee exporter, coffee prices are expected to continue to soar. The phenomenon of hoarding and bad weather have exacerbated supply constraints in Vietnam.
Affected by Vietnam's supply shortages, the London Robusta coffee futures price has risen by about 50% this year, reaching the highest level in at least 16 years. Vietnam is the world's second-largest exporter of coffee and the largest producer of Robusta coffee, accounting for about one-third of the global supply of Robusta coffee beans.
Hot, dry weather has swept through most parts of Vietnam, raising concerns about the next coffee bean harvest and possibly lower supply.
Trinh Duc Minh, head of the Buon Ma Thuot Coffee Association in Dak Lak Province of Vietnam, said that water levels in many lakes in the central plateau have seriously declined, and groundwater sources have dried up. He predicted that the 2024-25 coffee bean harvest in Dak Lak Province may be 15% lower than the previous estimate of 520,000 tons, while previously estimated production has declined from the previous year.
Reduced coffee production has led to the phenomenon of hoarding
In addition to extreme weather, hoarding is also exacerbating the shortage of Vietnamese coffee beans.
Local coffee bean prices in Vietnam have soared to record highs as farmers and middlemen compete to stock up on coffee. Vietnam's 2023-24 coffee bean harvest was poor, and the purpose of hoarding was to wait for better prices. But this has triggered a record wave of default on existing contracts, making it harder for exporters to find sources of supply.
According to traders' estimates, since Vietnam began harvesting 2023-24 coffee beans in October last year, farmers and intermediaries may have undelivered 150,000 to 200,000 tons of coffee beans, which is equivalent to about 10% to 13% of the coffee beans that have already been harvested.
Nestle said it had to buy more coffee beans from places such as Brazil, Indonesia and India to maintain supply to its global factories.
Vietnam's largest coffee exporter, Intimex Group said Vietnam had to import about 200,000 tons of coffee beans last year, and this measure will continue until 2024.
“We don't know when the price will peak.” Tran Thi Lan Anh, deputy general manager of Vinh Hiep, another major Vietnamese coffee exporter, said.
She added that farmers and intermediaries expect the cost of coffee beans to rise from around 130,000 VND (US$5.13) per kilogram to VND 150,000 (US$5.89) per kilogram.