Vietnam’s coffee export could reach $4B
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Domestic coffee prices are at high levels, providing opportunities for Vietnam to maintain a coffee export revenue of over $4 billion this year.
According to Mercantile Exchange of Vietnam (MXV), Robusta averaged $2,564 per tonne as of April 24 on ICE Futures Europe, which increased by nearly 40 compared to the beginning of this year.
Starting from early 2023, the market saw signals about the narrowing of supplies in major coffee-producing countries.
Statistics from the Vietnam General Department of Customs showed that Vietnam’s coffee export totalled more than 634,000 tonnes from the beginning of this year to April 15, lower than the result of 663,816 tonnes of the same period last year.
The drop in export volume occurred in the context that global coffee prices were at a high level, pushing up domestic prices to around VND52,000 per kg, a record high, according to giacaphe.com.
Besides, the coffee output of Indonesia, the world’s third largest Robusta producer, is forecast to be at around nine million tonnes, the lowest in the past decade, according to Volcafe. The Brazil National Supply Company forecast Robusta output of this country would drop by nearly 4 compared to the 2022-23 harvest to 17.51 million bags.
These figures show that there is not only a shortage of coffee in the short term but also a narrowing in coffee supply in the medium and long term, which will likely push up coffee prices.
Pham Quang Anh from MXV said that Vietnam’s coffee inventories were gradually shrinking after a record coffee export year. Additionally, the coffee output in 2022 dropped sharply by 10-15 compared to the initial forecast due to heavy rain in the harvest period, which made the supply tight and price increase inevitable.
“Starting from early 2023, the market saw signals about the narrowing of supplies in major coffee-producing countries.”
Currently, domestic coffee prices were at a high level compared to recent years, creating an opportunity for Việt Nam to maintain the export value of more than 4 billion USD in 2023.
Lower prices of Arabica than Robusta in the context of increasing concerns about global economic recession risks was an important factor for Vietnam to promote the export of coffee.
It was an ideal condition for Vietnam to increase the export of Robusta and affirm the position of being the world’s largest Robusta supplier, Anh said.
Still, Vietnam’s coffee industry should aim for more sustainable export in the long term.
While coffee export was narrowing down, farmers in Tay Nguyen (Central Highlands) tended to cut down coffee trees to grow durian as China had allowed the official import of durian from Vietnam.
Another problem was that Vietnam mainly exported coffee in raw forms, which must be tackled to increase added value.
He urged enterprises to invest in production and processing to increase added value and develop brands for coffee products to meet the tastes of consumers in different markets.
Questions & Answers
Q.Why is Vietnam's coffee export volume lower this year compared to last year?
Why is Vietnam's coffee export volume lower this year compared to last year?
The drop in export volume happened despite high global coffee prices, which pushed domestic prices to a record high. This occurred while signals indicated narrowing supplies from major coffee-producing nations.
Q.What factors are contributing to the rising global coffee prices mentioned in the article?
What factors are contributing to the rising global coffee prices mentioned in the article?
Decreased coffee output forecasts from Indonesia and Brazil, along with shrinking inventories in Vietnam after a record export year, are contributing factors. Heavy rain in Vietnam also reduced output by 10-15%.
Q.What challenges does the article identify for Vietnam's coffee industry despite the current high prices?
What challenges does the article identify for Vietnam's coffee industry despite the current high prices?
Farmers are cutting down coffee trees to grow durian due to new export opportunities, and Vietnam mainly exports coffee in raw forms. The industry needs to focus on sustainable export and added value.
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