Concerned about supply shortages, coffee exports still have room to grow

Statistics from the Vietnam Commodity Exchange (MXV), closing the trading week of September 4 - 11, the prices of two coffee products recorded a slight decrease, 2.14% for Arabica and 3.02% respectively. with Robusta. Coffee inventories on the Intercontinental Commodity Exchange (ICE), although still low, are starting to show positive signs along with the promotion of coffee exports in Brazil, causing prices to weaken this week.

Vietnam's coffee exports aim to reach a target of 4 billion USD in 2023

Specifically, the standard Arabica inventory on the ICE-US Department received 17,560 60kg bags from Brazil waiting for additional classification, although the total amount of coffee in storage still decreased by 33,230 bags in the past week. Additional goods from Brazil lead to expectations that the momentum of inventory data could be temporarily interrupted after hitting a 10-month low. This also creates confidence in ensuring enough supply in the market.

For the whole week, Robusta inventory on the ICE-EU Department improved, increasing from 33,630 tons to 35,280 tons. Boosted Robusta coffee exports from Brazil have had an impact on inventory data.

In August, Brazil exported about 197,470 tons, a sharp increase of 41.2% over the same period last year, data from the country's government showed.

Furthermore, the rise of the Dollar Index to a 6-month high pushed the USD/Brazil Real exchange rate up nearly 1% last week. The increasing exchange rate difference has contributed to boosting the sales demand of farmers in this country by earning more Real. And the availability of supplies right after the harvest also makes farmers bold in exporting new crops.

According to the latest statistics of the International Coffee Organization (ICO), global coffee exports in July 2023 reached 10.21 million bags, down 1.59% over the same period last year. Accumulated in the first 10 months of the 2022/2023 crop year, reached 103.74 million bags, down 5.72% over the same period last year.

ICO maintains its forecast that the total coffee supply this crop year is 171.27 million bags, up 1.7% compared to the previous crop year, but consumption demand is up to 178.53 million bags, up 1.66%. compared to the previous crop year. Thus, in the new crop year starting October 1, 2023, the world will still have a shortage of 7.26 million bags. The potential for increasing Vietnam's export coffee prices is still relatively abundant in the near future.

According to ICO, in July 2023, Brazil's coffee exports reached 2.6 million bags, up 2.8% over the same period last year. But exports from India, Indonesia and Vietnam only reached 3.01 million bags, down 6.2%. Africa's coffee exports only reached 1.37 million bags, down 1.1%. Central America and Latin America (excluding Colombia) exports increased by 9.4% to 1.66 million bags.

Although prices have tended to decrease slightly in the past week, in general, Vietnam's export coffee prices are maintaining at historically high levels. In August 2023, Vietnam's average coffee export price is estimated to reach 2,963 USD/ton, up 4.8% compared to July 2023 and up 25.8% compared to August 2022. In the first 8 months of the year, coffee exports reached 2,459 USD/ton, up 8.7% over the same period in 2022. This is good news for farmers and coffee export businesses.

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