Coffee review

The purchase price broke 100 million! Vietnam's Robusta to cut production by 20%

Published: 2024-05-20 Author:
Last Updated: 2024/05/20, Vietnam, the world's largest producer of Robusta coffee, has recently fallen coffee production in Vietnam, causing London Robusta coffee futures prices to rise by more than 50% in the past year, while domestic coffee purchase prices have also been soaring, according to the latest estimate of Central Highlands Raw Coffee released by the Vietnam Coffee Cocoa Association.

As the world's largest producer of robusta coffee, the recent decline in coffee production in Vietnam has caused the futures price of London's robusta coffee to rise by more than 50% in the past year. At the same time, the purchase price of coffee in Vietnam is also soaring. According to the latest Coffee and Cocoa Association of Vietnam, the estimated price of Central Highland raw coffee is 103 million to 107 million dong / ton (about 29000-31000 RMB / ton).

In Vietnam, it experiences the hottest season of the year from April every year. According to Vietnamese coffee traders, although the dry season in Vietnam has been expected, rainfall has been at a low level in nearly a decade. Rainfall monitoring from February to March shows almost no rain in south-central Vietnam, and the temperature is 1-3 ℃ higher than before. In addition, due to the influence of high temperature and drought, there is a decline in the water level of the Mekong River and land salinization in the main river, and there may be a shortage of water resources in the next irrigation cycle, which will seriously affect coffee production in the new growing season.

In addition to the effects of the weather, there is a lack of investment and farmers are turning to other crops, and local farmers are now turning to more profitable crops such as durian, avocado and mango, especially mango. According to local reports in Vietnam, in Anjiang, Vietnam, more than dozens of tons of mangoes are about to be officially exported, of which 7 tons will be officially exported to Australia and the United States, while another 13 tons will be exported to South Korea and have accepted many orders. ready to export to China, the United States, South Korea and Japan. With the increase in the market for such fruits and the shift of farmers to growing fruits, Vietnam's coffee acreage is decreasing, so the Vietnam Coffee Association predicts that coffee production may be 20% lower than the 1.84 million tons the previous year. Exports will also be down 20 per cent from 1.67 million tons in the same period last year.

And, according to the multinational Meteorological Bureau, the El Ni ñ o phenomenon from 2023 to 2024 will end around April 2024. But the climate impact of El Ni ñ o continues, while heat waves sweep across Southeast Asia and South America in the face of global warming, leading to the threat of production cuts in coffee-producing countries such as Vietnam, Indonesia and Brazil. Global coffee supply will be further tightened.

The cumulative rainfall in Brazil's Robusta coffee region in 2023 was the lowest in a decade due to El Ni ñ o, according to a report released by hEDGEpoint, a Brazilian investment consultancy. Although rainfall recovered in early 2024, it was difficult to recover from the effects of drought and high temperatures in the fourth quarter of 23 years.

In addition, geopolitical problems have also been troubling Vietnam. Due to the Red Sea crisis, Houthi forces attacked ships in the Red Sea, seriously affecting shipping between Europe and Asia, and ships had no choice but to stop shipping or make a detour, greatly increasing the transportation time and cost. Therefore, Vietnam focuses its market on Asia, especially the Chinese market. Recently, Vietnamese National Assembly Chairman Wang Tinghui will lead a delegation to visit China from April 7 to 12, which is expected to promote economic and trade cooperation between the two countries and promote economic and trade investment.