NEWS: Coffee Prices Soar All Of A Sudden, Vietnamese Stay Immovable

posted 14 Oct 2013, 00:21 by Diep Ho   [ updated 14 Oct 2013, 00:22 ]
Sun, Oct 13th, 2013

The robusta price has increased so sharply since the new 2013-2014 crop began. However, Vietnamese exporters cannot take full advantage of the opportunity to boost exports and make money.

Prices escalate suddenly

After losing nearly $150 dollar per ton in September, or the last month of the 2012-2013 crop, the robusta price in London unexpected rose sharply on the first days of October, the first days of the new 2013-2014 crop.

The price once soared by $50 per ton to the highest peak of $1,756 last Saturday, Hanoi time, before decreasing later of the day. As such, the price has increased by $98 over the last week to $1,611 per ton.

This has helped push the domestic coffee bean price to VND36,500 per kilo, which meant the VND1,500 per kilo just within seven days.

However, despite the price increases, there have not been many buyers and sellers. “The current coffee price is still lower than the sellers’ expectations,” said Tran Trung Duc, a merchant in Dakmil district of Dak Nong province.

A coffee exporter in Dong Nai province said that it’d be better to sell coffee in a small quantity as a measure to “test” the market. However, he said this proves to be impossible in the current conditions, when it’s very difficult to borrow bank loans for coffee trade. Meanwhile, coffee exporters still meet difficulties with the VAT refund procedures.

In Vietnam, the recent typhoon which caused heavy rains for many days has affected the coffee harvesting.

A farmer in Krong No district of Dak Lak province said if the rains continue, farmers would only have coffee to sell in November 2013 instead of October as initially expected.

Meanwhile, in the US, Europe and Japan, the main export markets for Vietnam, the winter has come. The coffee roasters in the markets now need materials to make products for the winter and the holidays to come at the end of the year and early the next year.

The net robusta inventories of Liffe NYSE has reportedly decreased sharply because Vietnam, the main exporter, though having entered the new 2013-2014 crop, has not got ready yet.

The US executive bodies have halted their operation, while the FED’s demand stimulus policies remain unpredictable. However, this, plus other factors, has prompted speculation funds to buy robusta and wait for their opportunities.

What will the prices be like?

The latest report showed that the net robusta inventories at Liffe NYSE have decreased to 60,380 tons, equal to 46 percent of that one year ago, the deepest low since 2000. Analysts said this is the sharpest decrease over the last few years, though some sources said the robusta output would increase in the new crop.

The net inventories are believed to decrease further, with the exports from Vietnam and Indonesia on the decrease, because the offer prices are higher than the trading prices on the trading floor.

The Japan Coffee Association’s report showed that the country’s inventories increased by 6,637 tons in August.

As for Vietnamese robusta, Japan only buys very clean and high quality coffee, accepting to pay high prices for the products (Vietnamese exporters sold at $500 per ton and more last crop).

However, since the Arabica output in Brazil and Columbia has increased sharply, Japanese roasters tend to buy Arabica. This would be a great challenge for Vietnamese high quality robusta producers.

Source Vietnamnet.