Supply shortages are expected to affect Vietnam’s Robusta coffee market. Demand is believed to stay high in the time to come, paving the way for coffee prices to continue rising for half a year.

According to the Mercantile Exchange of Vietnam (MXV), Robusta coffee prices at the Intercontinental Exchange (ICE) at one point, exceeded $2,800 per ton, a 28-year high. As of June 13, Robusta coffee was traded at $2,713 per ton, hovering around the peak of the last 15 years.

In Vietnam, coffee was traded at over VND65,000 per kilogram recently, the highest ever price level recognized, according to data from giacaphe website. The domestic price is 63 percent higher than earlier this year, when the price peaked at VND40,100 per kilogram. 

According to Pham Quang Anh, director of MXV’s information center, the coffee price hike is caused by gloomy export activities as Vietnamese stocks have become nearly exhausted.

In the first five months of 2023, Vietnam exported 866,121 tons of coffee, or 3.9 percent lower than that of the same period last year. Particularly, in May, only 149,667 tons were exported, down 8.5 percent compared with the previous month, and the second lowest monthly export since the beginning of the year.

Observers said that the inventory level in Vietnam has plummeted to a low. This is attributed to coffee export promotion in 2022 and a 10-15 percent output decrease of the 2022-2023 coffee crop, according to the Vietnam Coffee Association (Vicofa).

The US Department of Agriculture estimated that the 2022-2023-end inventory level in Vietnam is just 1,810 tons, the lowest since the 2019-2020 crop. 

The world’s economy is still in difficulty, and in major coffee markets such as the US and Europe, spending on non-essentials has decreased. In such conditions, Robusta coffee beans, which have lower prices than Arabica beans, are preferable.

Arabica coffee is traded at ICE at $4,029 per ton, 49 percent higher than Robusta. Coffee roasters tend to increase the use of Robusta coffee in an effort to cut down production costs to make products affordable to consumers.

In Europe, which imports 33 percent of the total coffee output of the world, Robusta coffee imports are on the rise. 

The International Coffee Organization (ICO) estimated the deficit of 7.3 million 60kg-bags of coffee in the 2022-2023 crop, the 10-year highest deficit. In general, the current conditions are supporting Robusta coffee and Vietnam’s coffee.

Regarding the supply from Vietnam, USDA has predicted that Vietnam would export 27.5 million bags only in the next group, the lowest level in the last 3 crops.

Viet Nam Net