Robusta prices reach a 16-year high, domestic coffee also surges

Coffee market on March 7th: Robusta prices hit 16-year high, technical buy orders drive sharp price increase

Excitement surged following the Federal Reserve chairman's statement before the U.S. Congress that the Fed may cut interest rates this year, leading most markets to turn overwhelmingly green... London futures coffee prices were no exception as technical buy orders drove a sharp price increase.

At the close of trading, Robusta coffee prices on the ICE Europe - London exchange resumed their upward trend. The May contract rose by $129 to $3,309 per ton and the July contract rose by $114 to $3,214 per ton, with significant increases. Trading volume was very high above average levels.

Similarly, Arabica coffee prices on the ICE US - New York exchange also rose. The May contract increased by 2.95 cents to 186.30 cents/lb and the July contract rose by 2.60 cents to 184 cents/lb, with significant increases. Trading volume was quite high above average levels.

Specifically, Lam Dong province has the lowest price at 87,000 dong/kg, up by 800 dong/kg. Next is Gia Lai province with a price of 87,400 dong/kg - an increase of 600 dong/kg. Dak Lak province is currently recording prices at 87,500 dong/kg, up by 500 dong/kg. Dak Nong province adjusted trading to the highest level at 87,600 dong/kg after an increase of 500 dong/kg.

Robusta hits a 16-year historical high. The main reason is the prolonged hot weather in the key coffee growing areas of Vietnam, causing concerns in the global market about the prospects of coffee supply for the new crop.

Exporters are facing difficulties in purchasing coffee in Vietnam, with some farmers waiting for higher prices while shipments to Europe are delayed due to conflicts in the Red Sea, contributing to restricting the supply.

The Fed chairman's assertion before the U.S. Congress of the possibility of monetary interest rate cuts this year, along with the Jolts employment data report for January showing an increase over the previous month and ADP's study indicating that the private sector created 140,000 new jobs in February, slightly lower than expected.

But this has demonstrated the steady growth of the world's leading economy, the basis for the Fed to cut interest rates without necessarily waiting for inflation to reach 2%, showing flexibility to satisfy the market and boost blue-chip stocks, leading to a sharp rise in the stock market.

Meanwhile, the Chinese government announced it would issue ultra-long-term bonds worth 1 trillion yuan (about $139 billion) to raise the GDP growth rate to 5% per year, also exciting Wall Street investors, with DXY falling by 0.4%, which supported most markets to turn overwhelmingly green.

Robusta coffee prices surged due to concerns about declining supply in Asia. Indonesia reported a 79.73% decrease in exports in January compared to the same period last year, bringing the total exports for the first 10 months of the current coffee crop (from April 2023 to March 2024) to only 1,935,960 bags, a decrease of 2,687,457 bags, or a decrease of 60.72% compared to the same period last year.

Vietnam's General Statistics Office estimates coffee exports in February to reach 160,000 tons, nearly a 20% decrease compared to the same period, due to the prolonged Lunar New Year holiday. The Vietnam Coffee Cocoa Association (Vicofa) estimates that the current crop 2023/2024 production will decrease by an additional 10% compared to the previous crop. While coffee prices in the domestic market in Vietnam are currently difficult to buy, traders have to push prices up very high, adding $220 - $280 per ton compared to the price of newly purchased futures contracts.

Report data from ICE - Europe shows that certified Robusta coffee stocks on the London exchange and the distribution recorded on Wednesday, March 6, decreased by an additional 1,180 tons, a decrease of 4.81% compared to a week earlier, to register at 23,350 tons (about 389,167 bags, 60 kg each), continuing to stand at a record low level.

(Nguyen Phuong / danviet.vn)