Vietnam's coffee exports may encounter difficulties due to stockpiling by some growers following a poor harvest and increased risks in the Red Sea region.

According to Mr. Trịnh Đức Minh, Chairman of the Buôn Ma Thuột Coffee Association in Đắk Lắk province, some farmers are holding onto their supply, waiting for domestic prices to rise before selling. In the meantime, they are relying on income from selling fruits such as durian to cover expenses. Domestic robusta coffee prices have reached record highs.

Mr. Phan Hùng Anh, CEO of Quang Minh Coffee Trading Joint Stock Company, noted, "I have never seen such stockpiling at this time of year. This is the most challenging season since I started the business in 1994. Rising fruit prices have led farmers to sell them first to cover living and production costs."

For the 2023-2024 coffee harvest season, Vietnam's output is projected to reach 1.66 million tons, according to the average estimates of coffee exporters and traders surveyed by Bloomberg. This figure is about 7% lower than the previous season.

Futures prices for robusta coffee in London are also at record highs due to supply shortages, having risen over 30% since early October 2023. Ms. Trần Thị Lan Anh, Deputy Director of Vĩnh Hiệp Co., Ltd., mentioned that some buyers have reduced their purchases of Vietnamese coffee due to increased transportation costs caused by the Red Sea conflict.

Mr. Phạm Quang Vinh, a coffee procurement agent in Gia Lai province for traders and exporters including Olam Group Ltd, reported that some Vietnamese coffee growers have canceled contracts signed at the beginning of the season following a surge in domestic robusta coffee prices.

He added that some farmers are concerned about missing out if prices reach 100,000 VND/kg, which is 40% higher than the current domestic price.

Source:Vietstock