W14 Coffee Update: Surging Domestic Prices in Vietnam Reflect Global Trends, Colombian Stabilization Fund, and Peru-Greece Trade Deal

Published Apr 11, 2024

In W14 in the coffee landscape, the coffee market witnessed significant developments across various regions. In Vietnam, domestic coffee prices surged sharply, reflecting global trends driven by concerns about supply disruptions in major producing countries like Brazil and Vietnam. Meanwhile, the Colombian government introduced the "Coffee Price Stabilization Fund" to support coffee growers facing financial challenges due to price fluctuations and rising production costs. This initiative aims to mitigate the impact of falling international prices and climatic factors such as El Niño. Additionally, ADEX signed an MOU with Helexpo to enhance bilateral trade between Peru and Greece, focusing on market diversification efforts. Lastly, extreme weather events in Southeast Asia, affecting major coffee bean producers like Vietnam and Indonesia, pose challenges for the global coffee supply chain. This has led to record-high coffee bean futures prices, impacting coffee-related businesses and potentially affecting consumers worldwide.

Coffee Prices Surge in Vietnam Amid Global Market Stability and Domestic Demand Growth

The price of coffee surged in Vietnam's domestic market on April 7, 2024, with a sharp increase ranging from USD 4.13 to 4.15 per kilogram (VND 103,000 to 103,500/kg), marking a significant rise of USD 0.20/kg (VND 5,000/kg) compared to W13. Internationally, the London and New York exchanges remained stable on April 7, with Robusta and Arabica prices holding steady for May-24 and Jul-24 delivery terms. However, both exchanges experienced significant increases in W14, driven by concerns about supply disruptions in major producing countries like Brazil and Vietnam.

Despite a slight correction in the London exchange, Arabica prices continued to soar to the highest levels seen in the past six months. Domestically, various provinces in Vietnam reported increased trading prices, reflecting the global upward trend in coffee prices. Notably, districts across Lâm Đồng, Đắk Lắk, Đắk Nông, Gia Lai, and Kon Tum provinces witnessed consistent or elevated purchasing prices, indicating strong demand and market dynamics in the region.

Colombian Government Launches Coffee Price Stabilization Fund to Support Growers

During the National Coffee Assembly in Bogotá on April 3 and 4, the Colombian government unveiled the "Coffee Price Stabilization Fund" aimed at mitigating losses faced by coffee growers due to price fluctuations or increased production costs. The fund will provide financial compensation of up to 80% of the price of coffee beans per kilogram. Colombia’s agriculture minister emphasized that this initiative comes in response to the financial hardships experienced by coffee growers, with data indicating the impact of falling international prices, rising production costs, and El Niño.

The Colombian President also addressed the conference, highlighting the challenges faced by the coffee industry and denouncing inequalities between producers and large organizations. He stressed the need to prioritize value creation in productive industries and steer away from the gradual privatization of the coffee sector, aiming to regain Colombia's prominence in the global coffee market.

ADEX Signs MOU with Helexpo to Enhance Peru-Greece Relations, Boosting Bilateral Trade

The Association of Exporters of Peru (ADEX) has signed a Memorandum of Understanding (MOU) with Helexpo, the Thessaloniki International Fair, to boost bilateral trade between Peru and Greece, aiming to enhance the modest trade volume of USD 41.3 million recorded in 2023. The agreement seeks to foster cooperation and facilitate mutual participation in trade events such as Expoalimentaria in Peru and the Thessaloniki International Fair in Greece. Despite Greece's ranking as the 68th destination for Peruvian exports, representing a mere 0.02% of total exports, both parties are committed to expanding market diversification efforts. Notably, Peru has seen sustained export growth to Greece since 2020, with products like coffee, squid, quinoa, and cocoa butter gaining traction.

Climate Change Threatens Southeast Asia Coffee Supply Chain, Driving Prices Higher

Extreme weather events and changing climatic conditions impact coffee harvests in Southeast Asia, home to major coffee bean producers like Vietnam and Indonesia. A heatwave in Vietnam could reduce output by up to 20% year-on-year (YoY), leading to lower exports from Indonesia for the second consecutive year. Consequently, global coffee bean futures are reaching record highs, with London robusta coffee futures up over 50% in the past year. This poses challenges for coffee-related businesses as consumption in Southeast Asia, particularly in countries like Indonesia and China, continues to rise sharply. The tight market situation and limited alternatives may result in squeezed margins for beverage and coffee-related businesses, impacting the retail sector's performance in Asia. As a result, companies are likely to pass on increased costs to consumers, affecting coffee enthusiasts across the region.