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Robusta coffee prices pushed up by drop in production in Vietnam

2024-04-02 22:26:29

The drought which has affected South-East Asia is weighing on the harvest of the leading exporter of robusta coffee, Vietnam, but also on that of Indonesia. This results in prices that explode on the market.

The latest Vietnamese coffee crop grew in conditions that were too hot and too dry than normal, with rainfall that was among the lowest seen in the last decade. Unsurprisingly, the 650,000 hectares dedicated to robusta in the country have suffered, and exports are expected to suffer. They could drop by 20%, according to the National Coffee Association.

Added to the effects of the climate is a more diversified agricultural practice: Vietnamese coffee farmers are developing other crops, such as durian, avocado, fruit or pepper. This development limits the growth of areas dedicated to coffee cultivation alone.

“Outstanding” prices

This tension on supply has been driving up prices for several months. Robusta has become more expensive than some Arabicas: the famously inexpensive coffee now sells for more than $4,000 per ton for immediate delivery, and exceeds $3,500 for delayed delivery in May. For certain qualities of coffee, the differential between the spot price and the futures price reaches 650 dollars, “ almost never seen before », Confides a trader.

This increase is also fueled by continued strong demand. The supply is no longer sufficient to meet the needs of consumers and, upstream, those of manufacturers.

Soluble coffee needs robusta

The increase in arabica prices two years ago led manufacturers to stock up on a little more robusta. Changing the compositions again today is not easy, just as it is difficult to change the percentage of robusta in soluble coffees, for reasons of industrial processes.

The Brazilian harvest which arrives in the summer should relieve the market. But the quality of robusta that is produced in the country is more difficult to market than that grown in Vietnam. The market could therefore survive for another six months.very tense», According to one of our interlocutors. Time for the next Vietnamese autumn harvest to be available for export.

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