Domestic coffee prices
On November 4, coffee prices in key Central Highlands regions increased explosively, by VND 2,200/kg, bringing the average price of the whole region to VND 119,000/kg. This is the strongest increase since mid-October.
Specifically, in Dak Nong (old), the price increased the most by VND 2,500/kg to VND 119,500/kg. Lam Dong also increased to VND 2,600/kg, reaching VND 118,200/kg. Dak Lak and Gia Lai both increased by VND 2,000/kg, reaching VND 119,000/kg and VND 118,500/kg respectively.
World coffee prices
The international coffee market had a session of price increase, dispelling the differentiation of last week.
London's Robusta exploded, surging by 159 USD/ton (up 3.51%), closing at 4,683 USD/ton.
Arabica (New York) also increased dramatically, by 14.60 US cents/lb (up 3.72%), closing at 406.65 US cents/lb. This strong bullish consensus is the main driver for skyrocketing domestic prices.
Assessment and forecast
Today's explosive price increase shows that the market is reacting strongly to new weather risks, completely overwhelming negative news.
The biggest bullish momentum comes from the double weather risk. In Brazil, the largest Arabica growing area (Minas Gerais) received only 33.4 mm of rain (75% of the average) last week, showing that drought returned after a week of heavy rain. At the same time, in Vietnam, typhoon Kalmaegi is expected to make landfall in the South on Thursday or Friday, threatening to cause damage to Robusta growing areas, boosting strong purchasing power.
This concern is further raised by the extremely low inventory situation. Arabica inventories have fallen to a 1.75-year low (only 431,481 bags) and Robusta is also at a 3.5-month low. This situation is still a consequence of the 50% US tax on Brazil.
This price increase has ignored negative factors, including hopes of the US-Brazil tariff lift and abundant Robusta supply from Vietnam (exports for the first 9 months increased by 10.9%).
