Export prices of Vietnamese coffee are likely to increase in the coming months, the Ministry of Trade (MoT) forecast, despite price decreases since February 2007.
The ministry said the decrease is only temporary.
Analysis of the coffee supply and demand on the international market shows that coffee output is not enough to meet demand. The coffee shortage is a golden opportunity for coffee producers, including Vietnam, according to the MoT.
Vietnam’s total coffee exports are expected to reach US$1.631 billion, increasing by 34 per cent over last year. In the first two months this year, coffee exporters have earned US$565 million in turnover from exporting 394,000 tons of coffee. The figures represent sharp increases in quantity (249.4 per cent) and in value (323 per cent).
Sharply increasing world market coffee prices have brought about healthy export turnover. January coffee prices rose by US$130-135 ton over the previous month, trading at US$1,475-1,480 per ton.
However, coffee prices have unexpectedly decreased since February, which analysts attribute to sales of speculators and goods funds. The price of Robusta in London is US$1,536/ton (delivery in March), down by 4 per cent from the beginning of February 2007. Meanwhile, Arabica in New York is being traded at US$2,568 per ton, down by 3 per cent compared to mid February 2007.
In the domestic market, material coffee prices have also decreased after hitting record heights in January. In Dong Nai and Lam Dong, Robusta is trading at VND24,000 per kilo.
Analysts, however, said the world coffee market would bounce back as demand remains very high and output is expected to be short. Changing weather will badly affect coffee production, especially Robusta coffee in the primary coffee-producing countries.
Brazil, the biggest coffee producer, has forecast its 2007 output at 41.5 million bags, down by 8-10 million bags from 2006. Vietnam’s coffee output is expected to decline considerably due to El Nino.
The International Coffee Organization (ICO) released a survey estimating 2006/2007 output of 121 million bags, an increase of 10.6 per cent compared to the 2005/2006 crop. Another recent survey by the organization showed demand for coffee increasing in Russia and China, two large population countries directly affecting coffee supply and demand.
At present, the US remains the biggest coffee export market for Vietnam, while Switzerland and Spain saw growth of 4,000 per cent compared to December 2006. Italy, Belgium, Indonesia, the Netherlands and France also imported more coffee from Vietnam. (Trade)
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