In 2005, price of domestic and export coffee remained at steady at a high level. The reason was a sharp decrease in the output of some coffee exporters while the world’s demand remained high. According to the forecast, Vietnam’s output of coffee will reach 10 to 10.5 million bags this year.
From the early year to late June 2005, prices of Vietnam’s domestic and export coffee continued to rise. The price of first-class robusta coffee reached its peak at VND18,200/kg, The price of second-class robusta coffee with 5 per cent broken black bean bought in Saigon port reached US$910 per tonne, rising by US$135 to US$140 per tonne compared with that of early in the year. The reason for this was the improvement in weather conditions in many major coffee cultivation areas in Vietnam, which saw estimated coffee output in the 2005-2006 crop reach only 109-110 million bags, down about 5 million bags over the last crop. Moreover, the increase of oil and fertiliser price also raised the transportation cost of coffee, having impacts on coffee prices.
From mid August to September 26, 2005, the price of Vietnam’s domestic coffee material and export coffee sharply decreased. The reason for this was a decrease in the world’s coffee price to its lowest level in 10 months as a consequence of speculators dumping to make profits. Vietnam’s coffee price fell as it was not yet time for the new crop to be harvested and the supply of coffee became exhausted.
After more than one month falling continually, from late October to December 20, 2005, Vietnam’s coffee price gradually rose again until it eventually reached the same level as in April 2005. The reason for this was that the output of coffee in the first month of the 2005-2006 crop of some big coffee exporters sharply decreased while demand on the world’s market was still high. This encouraged businesses to purchase, which significantly raised coffee prices.
The price of first-grade robusta coffee in the markets in Dak Lak and Buon Ma Thuot on December 20 reached VND16,600 per kg. This price is VND6,000 higher than earlier in the year. Along with the upward trend of the domestic coffee price, Vietnam’s export coffee price also increased dramatically. The FOB price of first-grade coffee bean ranges from US$970 to US$980 per tonne at HCM City Port, up more than 30 per cent compared with that at the beginning of the year’s crop and Arabica coffee price is now at US$2,000 per tonne. Businessmen expect that in the 2005-2006 crop, the price of coffee exports will rise from 5 to 10 per cent compared with those of the last months of the 2004-2005 crop due to a decrease in the world’s coffee savings.
One of the reasons pushing up the price of coffee domestically again is the speculation of foreign organisations and the increase of prices on the international transaction floor. Despite the sharp increase of price, the collection of coffee material faces difficulty because farmers and traders keep goods prices higher.
Forecast for 2006The output of coffee in the crop which will have been harvested by September 2006, is estimated to reach about 10 to 10.5 million bags, an equivalent amount of 600,000 to 630,000 in tonnes, down compared with the 12.5 million bags of the last crop due to prolonged drought in 2005. Meanwhile, some coffee cultivation areas in the Central provinces of Vietnam were affected by Damrey storm, the most terrible hurricane in the North in the last decade. From the beginning to the end of the 2005, the price of Vietnam’s export coffee increased by 30 per cent while its quantity decreased by more than 20 per cent. Therefore, with the current upward trend in coffee prices, it is estimated that the price of exported coffee will rise by 10 per cent and at the same time the export quantity will be down due to the decrease of output.
Ngoc Dung
Vietnamese
