Vietnam coffee export turnover to enter $5 bln territory in 2024

The Vietnamese coffee industry is set for a record export turnover next year, hitting $5 billion for the first time ever, industry insiders and experts say.

They noted that low inventories have continuously pushed domestic and export coffee prices to new peaks in recent days.

The price of Robusta coffee in the domestic market early December increased sharply from end-November, contrary to what usually happens when the Central Highlands region enters harvest time.

In the domestic market, the price of green coffee beans in the Central Highlands and southern provinces remained stable on Monday compared to the previous day, at around VND67,200-68,000 ($2.8) per kilogram.

Domestic coffee prices increased by VND900-1,000 ($0.04) per kilogram week-on-week and over VND8,000 ($0.33) per kilogram from the beginning of December.

In a report on the coffee market released December 21, the U.S. Department of Agriculture (USDA), estimated world coffee inventories in the current crop at just 26.5 million 60kg bags, down 16.7% from the previous report and 4% from the 2022/2023 crop estimate. This is the lowest inventory level recorded in the past 12 years.

Phan Minh Thong, chairman of leading coffee exporter Phuc Sinh Group, said: "From July to October, we almost had no coffee to sell. We have to work at full capacity from November to December for better export output and value. Currently, the export volume has doubled and the export value has tripled year-on-year."

Do Ha Nam, vice president of the Vietnam Coffee-Cocoa Association (Vicofa), said some households have held on to their output, waiting for higher prices, causing difficulties for export businesses.

"Unpredictable fluctuations in coffee prices have caused a series of difficulties for exporters. From June to October, businesses had no coffee for delivery as contracted," he said.

Nam said he expected that due to falling output and increased domestic consumption demand, Vietnam's coffee export volume in the 2023/2024 crop will decrease to about 1.4 million tons. However, because coffee prices continue to rise, coffee export turnover is likely to set a new record, at $4.5-5 billion next year.

Recently, Vietnam had to import nearly 100,000 tons of coffee from Brazil and Indonesia to serve signed contracts.

According to Vicofa, in November 2023, Vietnam exported more than 120,000 tons of coffee, but half of this was to fulfil orders from the old crop.

Europe currently consumes about 40-50% of Vietnam's coffee exports and demand is still good in this region, it said, adding that with the current huge supply shortage, coffee prices are likely to stay high in 2024.

A report by the Foreign Agricultural Service (FAS) under the USDA estimates that Vietnam's 2023/2024 coffee production will decrease to 27.8 million bags from the 31.3 million bags estimated in May 2023 because of unfavorable weather. The inventories are also likely to fall to just 390,000 bags instead of 2.76 million bags as previously estimated.

Vietnam earned $4.06 billion from exporting 1.78 million tons of coffee in 2022, an increase of 13.8% in volume and 32% in value compared to 2021. This was also the first time that the nation’s coffee export value topped the $4 billion mark.