Low global output drives coffee prices to record high

By Thi Ha   April 4, 2024 | 09:00 pm PT
Coffee prices rose by 5% from VND98,100 ($3.93) per kilogram last week to a new all-time high of VND102,800 on Thursday.

They have more than doubled from last April’s VND49,000, Phan Minh Thong, chairman of agricultural products exporter Phuc Sinh Group, said.

Prices are also skyrocketing in the global market, with May Arabica KCc1 futures contract rising to an unprecedented $4,500 per ton and May Robusta LRCc2 to $3,802 on Thursday.

Exporters said a supply shortage has created huge demand for Vietnamese coffee beans among roasters globally, leading to the surge in prices.

In the domestic market, merchants are struggling to procure beans amid dwindling supply as many farmers have already sold their entire stocks.

The record low inventories are one of the main reasons for the rise in prices, according to Nguyen Hai Nam, chairman of the Vietnam Coffee Cocoa Association.

Global production has declined due to droughts in coffee-growing countries caused by climate change and the El Nino phenomenon, he said.

Increased shipping costs due to disruptions caused by tensions in the Red Sea are also driving up prices, he added.

Financial services company Marex Group has predicted a global shortage of around 2.7 million bags of robusta coffee in the 2024-25 season due to a decrease in production in Vietnam.

The country’s exports in 2023-24 would decrease to 1.4 million tons, it forecast.

In the first quarter of this year Vietnam exported 799,000 tons of coffee, up 44% year-on-year, for $1.9 billion, according to data from the General Department of Customs.

The average price is currently at $3,181 per ton, up 43.5% from a year earlier.

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