Vietnam's coffee production is expected to reach 29 million bags! Prices still have major variables

Recently, the U.S. Department of Agriculture released the status of the coffee industry in Vietnam in Asian countries. According to the report, Vietnam's coffee production in 2024/25 is expected to be 29 million bags (60 kg/bag), slightly less than the earlier forecast of 29.1 million bags. Rising coffee prices encourage coffee farmers to have more funds to invest in production.

Although Vietnam has been affected by severe weather in recent years, rising global coffee prices have contributed to the development of Vietnam's coffee industry, and farmers are currently using irrigation and intercropping technologies to mitigate the impact of earlier droughts and high temperatures, helping Slow down the decline in Vietnam's coffee production.

However, in the future, Vietnam's coffee planting area will stabilize at around 600,000 hectares. Farmers in the central highlands began to grow more diversified instead of growing coffee and turned to higher-income crops such as durian and passion fruit. After all, the current income from growing durian is twice that of growing coffee.

However, the current higher coffee prices can stabilize some coffee-producing areas. Coffee is still an important crop in provinces such as Dol Lok and Lin Tong in the Central Highlands.

In terms of exports, according to customs data, in the first half of the 2023/24 fiscal year, coffee exports reached 15.94 million bags, a decrease of 7% from the same period in the 2022/23 fiscal year. Its main importing countries are Germany, Italy and Spain.

Based on trade statistics and high coffee prices, Vietnam's coffee exports in the 2023/24 fiscal year are expected to be 26.85 million bags. But at the same time, domestic coffee prices in Vietnam have also remained high. The current purchase price of local coffee in Vietnam is 118 million-123 million VND/ton. For this reason, some traders will face potential difficulties in purchasing coffee.

Since some coffee farmers still have coffee stocks in their hands and want to sell them when the price is higher, traders are worried that they will not be able to balance domestic purchase and export prices, and in addition to the earlier incident of coffee farmers breaking contracts, coffee exporters are reluctant to sign future contracts.

As high temperatures and drought have had a negative impact on coffee production in 2023/24, such weather conditions will become more frequent over time.

To this end, the provincial Department of Agriculture and Rural Development (DARD) and the Western Highland Agricultural and Forest Science Institute (WASI) have developed strategies to maintain and improve sustainable coffee production, such as replacing old coffee trees with new varieties, encouraging intercropping to increase shade and water retention, adopting water-saving irrigation systems, and helping coffee farmers certify their villages.

Although the U.S. Department of Agriculture believes that Vietnam's output will reach 29 million bags, the market is generally not optimistic about this data. After all, international trader Volcafe had previously predicted that Vietnam's output in Robusta in 2024/25 will be 24 million bags, which is the lowest level in nearly 13 years.

The market believes that Vietnam's weather is still problematic at present, and the high probability of La Niña phenomenon may further threaten Vietnam's coffee production. Moreover, the harvest period of Vietnam's new production season will need to wait until October, so it is still necessary to pay attention to future weather changes.