Vietnam's domestic coffee spot prices have risen to record highs, mainly due to bad weather that has exacerbated the country's coffee supply and the continued wait-and-see attitude of farmers and net sellers, according to Coffee Finance A series of knock-on effects have also emerged, making it harder for exporters to obtain spot coffee and leading to a record wave of defaults on coffee sales in Vietnam this year.
Vietnam's local coffee exporters Yongxie Coffee Company said it is impossible to tell when prices will peak. However, local coffee farmers and dealers expect prices may rise further to VND150,000/kg, higher than the current price of about VND130,000/kg.
Meanwhile, hot and dry weather in Vietnam's coffee-producing regions since April has triggered market concerns about coffee production in 2024/25 and the possibility of a further reduction in the supply chain.
According to the Bangmei Shu Coffee Association, many lakes in the central highlands producing region used to irrigate crops have a very low water line and underground water sources have been depleted, and coffee production in the region is expected to continue to be reduced by 15 percent in 2024/25 compared to this year.
Prices are on an upward trend and there is still little optimism about production in the next season, which is spurring local coffee growers to stock up on more beans.
According to a Bloomberg survey of seven international coffee traders, Vietnam's coffee growers and distributors failed to deliver 150,000 to 200,000 tons of coffee beans in 2023/24, equivalent to a record 10-13 percent of annual production.
At a Vietnamese coffee industry conference earlier this month, local exporter Simexco said the default rate was much higher than expected, and that the company and other exporters had suffered losses due to the defaults, but were still able to deliver beans to global customers.
Meanwhile, Nestle also said it had to source more coffee beans from Brazil, Indonesia and India to maintain supply at its global plants.
Vietnam's largest coffee exporter, Intimex, on the other hand, revealed that it had to import about 200,000 tons of coffee beans to ensure the normal operation of its business.
Translated with DeepL.com (free version)