The market expects coffee prices to remain high in the next 3 to 5 years!

Earlier, due to heightened concerns about the tightening of global coffee supply, coffee futures prices continued to rise, and Arabica futures prices in New York rose 4%, reaching an all-time high of 343.4 cents per pound. Us C coffee futures, the industry benchmark, also hit a high of 348.3.

But yesterday, US C coffee futures began to fall, returning to the level of 319.6 cents per pound. In addition, the price of Robusta futures continued to fall, falling to $5059.5 a tonne at one point. It is said that the price correction may be a sign of another correction in the relationship between supply and demand in the market.

In addition, according to relevant sources, due to the recent interest rate hike by the Brazilian central bank, the benchmark interest rate has been raised to 12.25%. High interest rates will increase the cost of exports, leading to a rise in the price of Brazilian coffee. And Brazilian traders have slowed coffee sales in order to ensure future coffee stocks. As a result, traders began to buy cheaper coffee beans, so they increased their purchases of Robusta coffee in Vietnam.

In addition, recently, the United States Department of Agriculture (USDA) also issued a report on Vietnam's coffee industry, which estimated that Vietnam will produce 30.1 million bags (60 kg / bag) of coffee in 2024, including 29 million bags of Robusta coffee and 1.1 million bags of Arabica coffee. Although it is less than the previous forecast in June, it is higher than the 27.5 million bags of coffee produced in 2023 and 24.

It is reported that although Vietnam suffered a severe drought from March to May this year, resulting in dry land and a shortage of water resources, seriously affecting the growth of coffee trees, the harvest season ushered in heavy rain, resulting in a decline in coffee production. However, according to the report, the recent rise in coffee prices has led to an increase in farmers' incomes and increased investment in coffee cultivation to help Vietnamese coffee products recover and reduce losses during the drought.

At present, Vietnam is in the harvest season, and according to the president of the Vietnamese Coffee and Cocoa Association (VICOFA), the harvest started later this year because of heavy rain during the harvest season, but this year most farmers collect fruits that are more ripe, of better quality and heavier. As a result, production will be increased and will be conducive to exports.

However, the market is still worried about the climate. Recently, the World Meteorological Organization released the latest forecast that between December 2024 and February 2025, there is a 55% chance of changing from the current neutral state to La Nina phenomenon, but this La Nina phenomenon is expected to be relatively weak in intensity and short in duration.

In addition, the group also said that El Ni ñ o occurred at the beginning of the year, and even if La Nina did occur in December, its short-term cooling effect would not be enough to offset the warming effect of record greenhouse gases. After May this year, there were no El Ni ñ o and La Ni ñ a, but the world still experienced a series of extreme weather events, including record rainfall and floods, and severe droughts and high temperatures in many areas. these become the new normal of climate change.

As a result, some people in the industry said that current concerns about the weather continue to put pressure on soft commodities, and coffee prices are likely to fluctuate one step next year. In addition, the coffee industry will also receive geopolitical, conflict, labor shortage and other factors to exacerbate the instability of the supply chain, and the growth cycle of coffee trees is longer, even if large-scale cultivation still takes nearly five years to mature and begin to bear fruit, coffee prices are expected to remain high in the next three to five years.

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