Domestic coffee prices
On October 26, coffee prices in key Central Highlands regions remained stable at the weekend closing price of VND 116,300/kg.
Week developments (October 20 - October 24): The past trading week was a strong recovery week. The market started the week at a low level (about 114,300 VND/kg), then exploded in the middle of the week, especially the skyrocketing increase of 2,800 VND/kg (October 23), bringing prices closer to the 119,000 VND/kg mark. Despite a slight adjustment, the market ended the week with an impressive net increase of VND 2,000/kg, showing that buying pressure has returned.
Looking back at the coffee price movements last month (September - October), the market experienced a dramatic month and a half. After reaching a peak of VND 122,000/kg at the end of August, the price suffered a deep decline to VND 111,400/kg in mid-September. Since then, the market has entered a recovery phase, despite being continuously interrupted by profit-taking sales. The current price of VND 116,300/kg is still about VND 5,700/kg lower than the August peak, showing that the market is still in a major adjustment phase.
World coffee prices
International exchanges are temporarily closed. The developments last week showed the tug-of-war between the two types of coffee.
Robusta ( London) was the focus of the week, closing at a high of 4,571 USD/ton. Robusta's rally was driven by concerns that Typhoon Fengshen could harm coffee trees in the Central Highlands and floor inventories fell to low levels.
Arabica (New York) also fluctuated strongly. Arabica prices are supported by long-term factors such as the risk of drought in Brazil (La Niña) and Arabica inventories hitting a 19-month low. However, the increase was held back by the news that Brazil's weather had returned to rain (136% of the average), easing concerns about drought.
Assessment and forecast
The past trading week showed that the market is being dominated by a battle between long-term shortage risks and short-term actual supply.
The upward pull of prices is still very strong, mainly due to the inventory crisis (both Arabica and Robusta are at very low levels) and policy risks (US-Brazil customs clearance, Colombia). Concerns about a poor crop in Brazil due to La Niña are still a factor supporting prices in the long term.
The downward pull in prices is not weak, coming from the forecast of Vietnam's bumper Robusta crop (up 6.9%) and Vietnam's exports in the first 9 months of the year increased by 10.9%, showing that actual supply is still abundant.
It is forecasted that coffee prices will continue to fluctuate strongly next week. The market will have to balance between the lack of inventory ( Helping increase prices) and news about the new crop about to begin (pricing down).
