Prices are in a historic crop year

Coffee prices are unprecedentedly high in history

There are only a few days left before the coffee industry enters the new crop year of 2024–2025. Looking back at the 2023–2024 coffee crop year, coffee prices, including domestic prices, world prices, and export prices, are seen to have continuously increased sharply and set new records.

Specifically, the flat price of green coffee in the Central Highlands has been high right from the beginning of the crop year, October 2023. Since the beginning of 2024, the price has continuously increased, successively surpassing unprecedented milestones of VND 80,000/kg, VND 90,000/kg, and then VND 100,000/kg by the end of March 2024. The peak price of coffee in the 2023–2024 crop year is more than VND 130,000/kg in April 2024.

Sharing with Vietnam Agriculture Newspaper analyses about the world coffee price, Mr. Nguyen Quang Binh, coffee market analyst, said: “The London futures price in April 2020 was only USD 1,200/ton. At the beginning of the 2023–2024 crop year, the futures floor price increased to USD 2,400–2,500/ton. By the end of last August, the price had increased to USD 5,200/ton.”

Particularly, the shortage of Robusta coffee supply also caused the price of this coffee type on the world market to increase sharply in the 2023–2025 crop year.

According to estimates by the Ministry of Agriculture and Rural Development, Vietnam’s coffee output in the 2023–2024 crop year is 1.47 million tons, down 20% compared to the 2022–2023 crop year. This is the lowest output level in the past 4 years. In the first 7 months of 2024, Vietnam exported 979,000 tons of coffee, down more than 12% compared to the same period last year.

This shortage pushed the Robusta coffee price on the London floor to approximately USD 5,000/ton in the last days of August 2024. Thanks to that, Vietnam’s coffee export turnover still increased strongly, reaching USD 3.6 billion in the first 7 months of this year, up over 33% compared to the same period last year.

Regarding the export price of Vietnamese coffee, it has also been unprecedentedly high in history. In July 2024, the average export coffee price reached over USD 4,900/ton, up 75% compared to July 2023.

The price race is higher and higher

According to Mr. Nguyen Quang Binh, right from the beginning of the 2023–2024 crop year, the export price has been adding a few hundred dollars, and then sometimes the price was up to USD 1,500–1,700/ton higher than the London futures quoted price. Up to now, the export price is about USD 100-200/ton higher than the quoted price on the London floor. Thus, there is no other year that can be compared with the export price of this crop year.

Analyzing factors contributing to the record price increase, the market analyst in the coffee industry said that, “Initially, in the first months of 2003, prices were relatively quiet and safe. However, there were times when exporters in Brazil predicted normal, stable prices and sold a lot of goods, making them unable to deliver goods.

Additionally, the consequences left behind by the supply chain crisis or wars that interrupted necessary periods of supply caused the shortage of coffee in domestic markets. From there, the world’s coffee traders ran to Vietnam with the hope that Vietnam could help them in this situation of lacking goods. When they came to Vietnam, they bought massively and at any price, while an item only has a certain quantity. Thus, coffee prices keep increasing.

Besides the output factor, the coffee market in Vietnam as well as in many other countries initially lacked capital and credit. Both exporters and importers had difficulty in terms of borrowing money from banks while coffee prices were increasing. So at that time, even if having money, it was impossible to buy at a low price but compulsory to buy at a high price to deliver goods on schedule and according to contract commitments, thereby making coffee become more and more rare. Meanwhile, when the price is increasing, gardeners, farmers, and exporters will be more cautious, which makes the price race higher and higher.”

Mr. Do Ha Nam, Vice Chairman of the Vietnam Coffee – Cocoa Association, said that the 2023–2024 coffee crop year can be said to be a historic crop year of Vietnam’s coffee industry, especially in terms of price. Never before has Vietnam’s coffee industry been able to set a record on high coffee prices, which can even be considered the most expensive in the world at some times.

The farmers themselves are very excited when the price of coffee is like a dream. Vietnamese businesses initially encountered some difficulties related to buying young coffee and delivery. But after that, all units handled them well and achieved results. Therefore, this crop year is considered a highly successful year for both farmers and the coffee industry of Vietnam. It is expected that this crop year is definitely the first year the coffee industry reaches over USD 5 billion.