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Price of exported coffee went down sharply and no sign of stopping

08:38 | 10/11/2019

VCN – According to the Ministry of Agriculture and Rural Development, exported coffee was estimated to achieve 87,000 tonnes with value of $158 million in October of 2019, bringing the volume of exported coffee in October reached 1.35 million tonnes and $2.33 billion, decreasing by 14.6 percent in volume and decreasing 22.3 percent in value compared to the same period in 2018.

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The price of coffee fell due to current global supply of coffee is excessive and trade tensions

In particular, Germany and the US continued to be the two largest markets of coffee consumption of Vietnam in the first nine months of 2019 with market share of 13.3 percent and 8.6 percent respectively.

According to the Ministry of Agriculture and Rural Development, the sharp decline in average export price of coffee continued to be a factor leading to a decline in Vietnam's coffee exports to most traditional markets such as Germany, the US, Italy and Spain. Accordingly, the average export price of coffee in nine months of 2019 reached $1,717/tonne, a decrease of 9.6 percent over the same period in 2018.

In October 2019, world coffee prices fluctuated sharply. Comparing to the previous month, the price of robusta coffee delivered in November 2019 London market decreased $108/tonne to $1,212/ton. The price of coffee fell due to current global supply of coffee is excessive, combined with a slowing world economy and trade tensions.

The domestic coffee market also fluctuated sharply, following the trend of the world market. Compared to September 2019, the price of coffee in Central Highlands provinces decreased by VND 1,900 - VND2,300/kg to VND 30,800 –VND 31,300/kg. Robusta coffee price (FOB Saigon port) decreased by $104/tonne to $1,366/tonne.

The Ministry of Agriculture and Rural Development forecasted that coffee prices would remain on a downward trend until the end of this year as Vietnam has started its new harvest seasion, while Brazilian coffee inventories last year and in 2019 were still plenty and Brazilians were still selling strongly due to the low real exchange rate of the Real Brazil (BRL), which is benefiting Brazilian coffee growers.

Meanwhile, coffee reserves in major markets like the US continued to rise. According to the Green Coffee Association, as of the end of July 2019, total coffee inventories at warehouses across the US increased by 279,052 bags (60kg/bag) compared to the end of June 2019. In particular, the coffee reserve in New York port increased sharply compared to the end of June 2019 with the increase of 89,723 bags.

Facing this situation, the Vietnam Coffee Cocoa Association (VICOFA) recommended export enterprises calculate carefully when operating business. They should enhance buying and selling immediately, fixed prices before delivery. Besides that, while the price was low, it is necessary to avoid mass selling of coffee.

The VICOFA also proposed the Government and bank extend debt relief to farmers in the previous crop, facilitate to businesses to borrow at least a low interest rate for six months to temporarily store coffee during the period at the beginning of the frantic harvest.

Earlier, at the 125th session of the International Coffee Organisation (ICO) held in September, roasters and leading traders signed a statement about the sustainability of the world coffee industry. This was the first time that all leading coffee stakeholders from around the world have agreed, together with government representatives, to show a strong commitment to implementing solutions for sustainable development and comprehensive coffee industry in the spirit of common values ​​and determination to meet the United Nation's sustainable development goals.

By Nguyễn Hiền/Thanh Thuy