return icon Vietnamnet.vn

Coffee market feels brunt of fluctuating policies

According to an estimate by the Agency of Foreign Trade under the Ministry of Industry and Trade, Vietnam’s coffee export volume in November reached 78,000 tonnes, worth $181 million.

Coffee prices reversed their course and fell from the previous sessions, as investors seem less worried about the impact of a new coronavirus variant – however, market analysts believe that prices will further normalise towards the last days of the year.

{keywords}
Illustrative photo. Source: nongnghiep.vn

“As coffee was overbought on both the New York and London bourses, the price for the commodity was pulled down as a typical reaction to important global developments,” commented Nguyen Quang Binh, an independent stock analyst living in Ho Chi Minh City.

“Coffee traders are somewhat familiar with the behaviour of financial exchanges, panicking when they are too worried,” Binh explained. “In many sessions, financial speculators have partly used the two coffee floors as a place to store capital. But as the Omicron variant so far seems less severe than Delta, investors began moving capital from one commodity group to another, such as energy, metals, and currencies.

Recent movements in world coffee prices have shown concern about changes in import markets. Nguyen Quoc Toan, director at the Agricultural Products Processing and Market Development Department under the Ministry of Agriculture and Rural Development said, “At the moment, the market’s prospects remain unclear for Vietnamese coffee exporters because many importers push the risk to the seller.”

Toan realised that domestic coffee importers currently do not want to sign FOB (free on board) contracts, and instead asked sellers to switch to CIF (cost, insurance, and freight). Meanwhile, Vietnamese exporters are concerned that CIF deliveries will render it difficult to compete with others and cannot guarantee profits.

“If selling via a CIF contract for around $1,900 per tonne of Robusta coffee, plus the freight, the final price will be sky high,” Toan said. “In the first half of the year, only 35 per cent of coffee exporting enterprises accepted to switch to CIF contracts.”

More broadly, analyst Binh said, there is a reason for traders to expect history to be repeated, despite many obstacles ahead. Ten years ago, the price of coffee derivatives reached peaks thanks to stimulus programmes at that time.

The highest peak at that time for Robusta was over $2,600 per tonne. Similar highs have just been established on the London and New York exchanges, with prices at $2,357 and $2,412 per tonne, respectively.

Last week, the prices on both floors were spiking, while the price of domestic coffee in exporting countries increased slowly. The price of Robusta derivatives reached a decade high, but the price of raw coffee remained the same, sitting around $1,826 per tonne, the highest level for the last four years.

At that time, the domestic coffee price traded especially high towards the weekend. Although the new crop has not been released yet, many contracts have been signed and deliveries are taking place. However, due to high freight rates, most exporters request buyers to take full charge of freight costs.

In the context of high container shipping rates, some importers have chartered bulk ships for transportation. Although bulk freight is cheaper, risks affecting the coffee quality are very large and losses often exceed the allowable tolerance by up to 3 per cent.

Binh said that commodity traders need to be aware of changes on the floor, though also do not need to stress too much about its fluctuations, as a lot is connected to speculations.

“The coffee market is inherently very sensitive to US monetary policy,” Binh explained. “When faced with a sharp increase in inflation, it is likely that policymakers will quickly withdraw stimulus programmes or raise interest rates. By the end of 2021, the price of coffee on both exchanges, no matter how hot, will likely soften again.”

Recent changes to the US Department of Agriculture’s coffee production forecast have had a sizable effect on the intensity of gains on each coffee floor, even though London prices hit their high 10 years before the New York Stock Exchange.

The department forecasts that the output of the new crop year 2021-2022 of Vietnam – the world’s largest Robusta producer – increases to 31.1 million bags of 60kg each compared with the previous forecast of 30.8 million bags.

“The business world is expecting a large number of goods from Vietnam. This sentiment has overwhelmed the pressure of betting on the Robusta floor,” Binh said.

 

Coffee exports in November decrease in volume and value

According to an estimate by the Agency of Foreign Trade under the Ministry of Industry and Trade, Vietnam’s coffee export volume in November reached 78,000 tonnes, worth $181 million, down 21.4 per cent in volume and 16.5 per cent in value compared to October. In the first 11 months of 2021, Vietnam’s coffee exports were estimated at 1.36 million tonnes, worth $2.63 billion and down 4.4 per cent in volume, but up 6 per cent in value over the same period in 2020.

In November, the average export price of Vietnam’s coffee was estimated at $2,327 per tonne, up 6.3 per cent compared to October and 21 per cent compared to November 2020. In the first 11 months of 2021, the average export price of coffee was estimated at $1,931 per tonne, up 10.7 per cent over the same period in 2020.

 

Source: VIR

Vietnam to gain US$6 billion from coffee by 2030

Vietnam to gain US$6 billion from coffee by 2030

Vietnam will step up its processed coffee industry to take full advantage of the benefits from free trade agreements, towards the goal of aiming for an export target of US$6 billion by 2030. 

Vietnamese coffee industry to go global

Vietnamese coffee industry to go global

Though COVID-19 has brought challenges to the coffee industry, businesses can nevertheless seek to adapt by exploring innovative and value-added ideas for Vietnamese coffee.

MORE NEWS

Automobile sale strongly rebounds in 7 months

Automobile sales in Vietnam posted a month-on-month increase of 20% and a year-on-year surge of 88% in July, the Vietnam Automobile Manufacturers’ Association (VAMA) reported on August 11.

Authorities warn transport companies on fare prices

Fuel prices have fallen back to the pre-January level, but many transport firms still refuse to adjust their fares, according to authorities.

Hanoi handles over 700 long-stalled projects

Hanoi City has reviewed and handled over 700 long-delayed projects covering a total area of more than 5,000 hectares to speed up the investment in and completion of the projects and avoid a waste of land.

Vietnam to develop game industry: official

The Ministry of Information and Communications (MIC) is developing a strategy with specific goals and norms to develop the game industry, said Le Quang Tu Do, deputy director of the Authority of Broadcasting, Television and Electronic Information.

Five Vietnamese skaters to compete at int'l figure skating competition

Five Vietnamese skaters will compete at the 2022 International Skating Union (ISU) Junior Grand Prix of Figure Skating which will take place in the Czech Republic from August 31- September 3, and in Italy from October 12-15.

Vietnam stays ready for trade talks with US to address arising problems

Vietnam is willing to hold trade talks with the United States to timely solve arising problems and strengthen bilateral economic, trade and investment relations, in the interest of businesses and people of the two countries.

First-ever Namaste Vietnam Festival to take place in HCM City

Ho Chi Minh City is set to host the first-ever “Namaste Vietnam Festival" from August 12 to September 12 to mark 75 years of Indian Independence and 50 years of Vietnam – India diplomacy this year.

Vietnam, UN sign strategic framework for sustainable development cooperation

A Strategic Framework for Sustainable Development Cooperation (CF) between the Government of Vietnam and all UN resident and non-resident agencies in Vietnam for the 2022-2026 period was signed in Hanoi on August 11.

Vietnam promotes relations with both US and China, FM spokesperson

Vietnam wants to promote relations with both the United States and China, and expects both sides will exercise restraint for global peace, Foreign Ministry spokesperson Le Thi Thu Hang said at a regular press briefing on August 11.

Vietnam – new stop for semiconductor producers

Samsung Electronics’ plan to manufacture semiconductor products in Vietnam has sparked the hope that the Southeast Asian nation will be a new stop for the semiconductor industry.

Blockchain projects preferring long-term partnerships

With the blockchain market showing signs of recovery and the amount of capital increasing sharply in recent weeks globally, investors are now more confident in seeking out stronger connections to move forward.

Tourism Minister proposes extending for implementation of preferential policies

The Minister of Culture, Sports and Tourism suggested extending the implementation of support policies until 2023 to help tourism businesses overcome difficulties caused by the pandemic as travel businesses are still facing difficulties.

Quang Ninh to develop big-ticket tourism project

The government of Quang Ninh Province is set to develop a luxury tourism project at a total cost of over VND24.8 trillion, or US$1 billion, in Van Don District.

Vu Lan Festival: A cultural activity with Buddhist philosophy in Vietnam

The festival is an opportunity to remember the merits of parents and ancestors.

Minister of Public Security supports legal betting to fight illicit online gambling

Minister of Public Security To Lam says that the government’s decree on betting is expected to help reduce illegal online betting.
back_to_top