The price of cheap bean variety Robusta coffee has fallen 18% this year, and farmers are reluctant to sell and hoard their goods.
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Expectations among investors in the futures market that the abundance of coffee beans will lead to a further fall in prices are likely to be disrupted by sales by farmers in coffee producing areas, Bloomberg reported.
The price of Robusta, a cheap bean seed used to make instant and canned coffee, has fallen 18 per cent this year. As a result, Hoang Thi Thom, who grows Robusta coffee beans in Vietnam's Dak Lak province, is so far willing to sell only a tiny portion of her farm work, although she expects a harvest of six to seven metric tons this season.
"if we sell coffee beans at such a low price at this moment, we will suffer a lot of losses," she said. I intend to save the coffee beans harvested this season for sale after the Vietnamese Lunar New year in February. "
Hoang Thi Thom is not alone. Half a world away in Brazil, coffee bean farmer Joao Luis Carneiro Vianna also retains half of this year's harvest, much higher than the previous reserve of about 30 per cent. Because of the Arabica coffee beans he grows, the price has also fallen 8 per cent this year. Arabica is regarded as a high-quality bean seed with a high market price.
The harvest of coffee beans in Vietnam is expected to increase this year, and Brazilian production is expected to increase next year, and the market supply exceeds demand, causing the market to fall again and again. Eric Llull, coffee research manager at Export Trading Group (ETG) in Switzerland, expects a surplus of about 5.5 million bags (60kg each) of seasonal coffee beans in 2018 / 2019.
However, the reluctance of farmers in the world's first and second largest coffee producing countries to release their crops at low prices could undermine investors' expectations that coffee prices will continue to fall.
Jose Sette, executive director of the International Coffee Organization (ICO), said: "the farmers in these two countries are more experienced. The current market price level is not attractive to farmers, so they are in no hurry to sell. "
In Brazil, many coffee farmers organize large cooperatives and have large acreage, which allows farmers to retain harvests when prices are not ideal. For example, Vianna, which grows coffee in Minas Gerais, a coffee bean-producing region in southeastern Brazil, said it expected to sell its inventory only when the price reached 500 Brazilian lire (about US $154.55, about NT $4638.82) per bag, which was about 50 lire higher than the current market.
"I'm going to sell only if I can maintain my cash flow," Vianna said. I am waiting to see if there is a chance to sell my coffee beans at a better price. "
Source: written by Bloomberg: Liu Lizhen
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The international market for coffee is in the doldrums, coffee farmers in Brazil and Vietnam are unable to sell it, and Arabica has also dropped its price this year.
Due to the downturn in the international market for coffee, coffee farmers in Vietnam and Brazil are generally unable to sell coffee despite bumper harvests, in order to resist the downward pressure of prices, and the dream of bears may be dashed. The international market for Robusta coffee has fallen 17% this year, and coffee farmers in Vietnam's main growing region, Dole province, are generally reluctant to sell until after the Lunar New year. The price of Arabica coffee has also fallen by 8% this year, so Brazilian coffee farmers
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