Vietnam’s coffee prices hit record levels, driven by reduced Arabica supply and farmer speculation. Prices in the Central Highlands reached VND131,000 (US$5.1) per kilogram. Despite soaring values, uncertainties regarding market timing and potential fake products are emerging among growers. Industry experts predict sustained high prices until mid-2025, urging caution against excessive speculation.
Coffee prices in Vietnam have reached historic highs, exceeding forecasts and igniting concerns over potential market speculation. On February 11, prices in the Central Highlands rose to VND131,000 (US$5.1) per kilogram, marking a daily increase of VND2,000 (US$0.079). Factors contributing to this surge include a tightening supply of Arabica from Brazil and local farmers withholding stock in anticipation of further price rises.
On the London stock exchange, Robusta coffee prices ranged from US$5,573 to US$5,696 per tonne, while Arabica prices surged on the New York exchange, climbing by US$540 to reach US$9,460 per tonne for the March 2025 contract. Phan Minh Thong, Chairman of Phuc Sinh JSC, referred to the rapid price increase as “insane,” cautioning that this trend may persist. He expressed that businesses are now compelled to operate with high prices rather than relying on fixed contracts.
The coffee price increase is largely attributed to constraints in Arabica supply due to the end of Brazil’s harvest season. Additionally, farmers are opting to hold onto their stock, influencing the market dynamics and maintaining high Robusta prices. Consequently, the price differential between Arabica and Robusta has expanded to US$3,780 per tonne.
Despite soaring prices, Vietnamese coffee growers express caution in selling their crops. For instance, Nguyen Thi Chien of Kon Tum shared that her family only sold one tonne at VND115,000 (US$4.53), choosing to store the remainder to seek better profit margins. The current volatility has left many farmers indecisive about when to capitalize on their harvests.
From October 2024 to January 2025, Vietnam experienced a significant fall in coffee exports by volume, even though the export value increased. In January alone, the nation exported 137,568 tonnes, garnering US$694.93 million—an 8.8 percent year-over-year increase in value, despite a 38.2 percent decline in volume.
Nguyen Ngoc Luan, Director of Global Trade Link Co., Ltd., remains optimistic, citing fears of crop failures and potential US tariffs impacting South American imports, which could benefit Vietnam’s market position. Conversely, Nguyen Huu Long from the Vietnam Coffee Academy highlighted that local prices still lag behind the London exchange rates, raising concerns of market manipulation.
The escalation in coffee prices has also elicited warnings about counterfeit coffee products. Recently, authorities in Gia Lai discovered facilities in Pleiku adulterating coffee with unidentified chemicals. Similarly, Brazil’s Coffee Roasters Association (ABIC) has alerted about low-quality coffee synthesized from non-coffee components.
Experts predict that despite the current price hikes, Vietnam’s coffee sector is not likely to witness an oversupply, as land availability for cultivation is limited. Predictions indicate strong coffee prices will persist at least until July 2025, although farmers are advised against engaging in extreme speculation to mitigate financial risks.
Vietnam’s coffee market is experiencing unprecedented price surges due to a tightened supply of Arabica and strategic stocking by farmers. While export values have increased, presenting an optimistic outlook, concerns over market manipulation and counterfeit production pose significant challenges. Experts foresee continued high prices but caution against speculation in volatile conditions. Maintaining a cautious yet strategic approach will be crucial for local farmers as they navigate this unpredictable landscape.
Original Source: www.thestar.com.my
