Vietnam's coffee exports are expected to exceed US$5.5 billion!

Recently, according to Vietnamese media reports, due to an average increase of more than 50% in coffee prices in 2024, Vietnam's coffee exports will exceed the US $5 billion mark. Although, although there is an increasing trend in coffee sales in Vietnam, it accounts for less than 20% of total production.

According to the Vietnam Coffee and Cocoa Association (VICOFA), 2024 is a special year for the coffee industry. Vietnamese coffee prices have been rising since the beginning of the year, rising by 90 per cent in just 10 months. According to statistics, from January to November this year, Vietnam exported nearly 1.2 million tons of coffee. Although the export volume decreased by 25.4%, the export volume still increased by 32.8% year on year to US $4.84 billion.

As a result, VICOFA also said that due to the increase in supply and the entry of the new harvest season in 2024 / 25, Vietnam's coffee exports will still be relatively smooth, so it is forecast that coffee exports will hit a new record of US $5.5 billion this year.

In addition, coffee in Vietnam's domestic market remains high, currently around 125000 dong / kg, which is 3000 dong / kg higher than the price in early December. Compared with the same period last year, the price of coffee is twice as high as that of the same period. This has also pushed up export prices, from US $3000 per ton at the beginning of this year to nearly US $6000 per ton recently.

According to statistics, this is mainly due to the growth of a number of coffee consuming countries, of which the European Union is still the largest importer of Vietnamese coffee, accounting for 39%, followed by Japan and the United States. In addition, countries in the Asian region have increased their imports of Vietnamese coffee this year. For example, China's market share has increased from 2.5 per cent to 3.8 per cent (compared with the same period last year in the first 10 months of this year), and China imported nearly 54000 tons of Vietnamese coffee in the 2023x24 crop year. In addition, imports from Malaysia, Indonesia and the Philippines also increased.

However, at present, the weather in Vietnam is not ideal, and according to media reports, it has been raining in the central area recently, which has led to the slow progress of coffee collection in the coffee-producing areas. Coffee fruits have ripened and cracked in many plantations, which can affect the harvest and yield of coffee, although it is difficult to supply in large quantities during the current harvest season.

In addition, the futures prices of both Arabica and Robusta coffee have fluctuated particularly this year, which has also affected some traders. It is reported that some traders signed sales contracts with buyers when prices fell because they did not correctly predict the trend of futures prices, but soon the prices rose, so they were unable to purchase coffee beans from farmers at low prices. In order to avoid default, they could only buy them at high prices to avoid loss of credibility, which eventually led to losses and bankruptcy of some traders.

Recently, many institutions are optimistic about the output of coffee in Vietnam this year. Although Vietnam experienced a severe drought from March to May this year, which led to dry land and water shortage, and seriously affected the growth of coffee trees, due to rising prices, farmers' incomes increased, and investment in land and plantations increased to help Vietnamese coffee crops recover in the drought and reduce the losses caused by drought.

But in addition to coffee crops, Vietnam's fruit exports have also been growing this year, attracting many farmers to cut down coffee trees and grow popular durian or other fruits, so Vietnam's coffee acreage is decreasing. Therefore, many markets believe that even if Vietnam's coffee production increases, it will not increase much, and there will not be much growth in the next few years, coupled with the fact that Robusta production in countries such as Brazil and Indonesia has not increased, as the market demand increases, coffee prices will only remain high.

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