Domestic coffee prices are forecast to increase

Domestic coffee prices have increased to VND46 million per tonne. However, many exporters still find it difficult to sign new export contracts. There are two reasons to believe that is true. One is that the quality of coffee is very erratic, the rate of black broken about 10% is floating in the domestic market due to rain gradually at the time of harvest. When buyers pay high prices, often accompanied by quality requirements must be guaranteed.

Second is that the arabica exporters in Central America are selling aggressively and accepting low prices to release the goods before Brazil sells aggressively. From May 16 to April 4, exports of Arabica processed wetlands in Central America increased by 9.4% over the same period a year earlier thanks to the seasons in many countries in the region, including Colombia (please See Figure 2).

This shows on the price difference of the two floor futures. By the end of June 16, the price gap between the arabica and robusta floors was below 30 cts / lb or about 660U / d, the real market was lower, there were real traders between Brazilian dried arabica and Robusta type 2, max 5% black, about 300 USD / ton. At this level, the roasters want to return to buy arabica because the difference between the two types is too cheap.

In the past, there was a peak at 180 cts / lb around $ 4,000 per tonne. The level of separation so that roasters can safely choose to buy robusta without worrying about $ 1,400 per ton.

Obviously because arabica is too cheap, the robusta market is completely disadvantageous. If the price of robusta futures continues to rise, nothing stops domestic prices from rising. The expected levels for this week are 47-47.5 million / ton. At this level, it is not entirely profitable to invest because once New York moves up, it is also possible that investment funds will sell London to New York.

(According to Vinanet)