Coffee prices continue raising due to limited supply

Coffee prices in the world are predicted to continue increasing because of limited supply.

Coffee prices in the world will continue to increase due to limited supply and increased demand. Photo: TL.

The shortage of coffee supply is forecast to last up to three years due to the impacts of climate change as well as the COVID-19 pandemic.

The Import-Export Department under the Ministry of Industry and Trade says the coffee prices world-wide continued raising due to concerns of supply shortages in the first half of October. 

Under a weather assessment report, the recent rainfall is insufficient to make Arabica coffee trees to flower at the end of season in growing areas in Brazil while too much rain, occurring in the Central Highlands region in Viet Nam, might slow down the ripening of Robusta coffee beans.

Therefore, the harvest of the new crop, which is expected to start at the end of October, is likely to be delayed due to unfavorable weather conditions.

It is forecasted that the coffee prices will continue to increase also due to an increasing demand.

Data from the Department of Crop Production under the Ministry of Agriculture and Rural Development, Viet Nam currently has about 695,000 hectares to grow coffee, with the yield of more than 1.7 million tonnes per year. Of which, the Central Highlands region accounts for 585,000 hectares with the yield of 1.66 million tonnes.

The Brazilian Institute of Geography and Statistics (IBGE) estimates that the country’s coffee production in the crop year of 2020-2021 will reach 48.9 million bags (each bag weighs 60 kilos), about 21.2 per cent lower than the crop year of 2019-2020.

In the meantime, the United States Department of Agriculture (USDA) says that the coffee production of the world in the crop year of 2021-2022 will decrease by 11 million bags compared to the crop year of 2019-2020, to 164.8 million bags.

The USDA also forecasts that the global coffee export will only reach 115,5 million bags, about 4.8 million bags because of a sharp drop in Brazilian export although the coffee export of Viet Nam increases.

The USDA also predicts that the global coffee consumption will increase by 1.8 million bags, reaching 165 million bags. The highest coffee consumption is in the Europe Union, the United States and Brazil.

The coffee inventory is estimated to be 32 million bags at the end of the crop year of 2021-2022, about 7.9 million bags lower than the previous crop year.

The World Coffee Organisation (ICO) says that the amount of global coffee import in the crop year of 2020-2021 increases by about 5 per cent compared the previous crop year, to nearly 83 million bags.

Coffee prices record on October 17

The price of Robusta coffee on ICE Futures Europe - London for delivery in November 2021 decreased by 25 USD (1.17 per cent), trading at 2,110 USD per tonne. Meanwhile, the price of Robusta coffee for delivery in January 2022 decreased by 24 USD (1.12 per cent), trading at 2,121 USD per tonne. Trading volume is above average. The inverse price structure continues to close the gap.

The price of Arabica coffee on ICE Futures US - New York dropped sharply. The price of Arabica coffee for delivery in December fell by 5.85 Cent (2.80 per cent), trading at 203.4 Cent per lb. The price of Arabica coffee for delivery in December also fell sharply by 5.9 Cent (2.78 per cent), trading at 206.25 Cent per lb. Trading volume continues to increase sharply.