The robusta supply for exports in Vietnam was insufficient, which led to continuous price highs. This movement caused robusta coffee to reach record levels, not seen in more than 30 years in the domestic physical market. This narrowed the difference in futures prices between robusta in London and arabica in New York, which sometimes fell to less than 20 cents per pound. Thanks to these record prices, even with an export volume below 1.5 mln tons (25 mln bags) in the 2023/24 crop, revenue from coffee exports reached a record of USD 5.43 bln, according to Vietnam’s Coffee and Cocoa Association (VICOFA).
At the beginning of the 2024/25 crop (Oct/Sep), coffee prices remained very high compared to previous years, with a FOB port differential of USD 50 per ton against the position at the London terminal of around USD 4,365 per ton. The harvest is just beginning, with only 5% of the crop reaped, and work should continue until the end of the year. Despite the heavy rains, storm Trami did not cause problems in the Central Highlands, the main growing region. Vietnam’s coffee production is projected at around 26 to 27 mln bags, with 24 to 25 mln bags of robusta. The number is lower than the USDA’s preliminary projection, which pointed to 29 mln bags, including arabica and robusta.
Before the rise in coffee prices, many farmers were switching from coffee to other crops, especially durian, due to higher financial returns. Many households also began to grow coffee in combination with black pepper and durian, leading to a significant reduction in both the number of coffee trees and production. In the last two years, the upward shift in coffee prices has reversed this trend, with many farmers in Vietnam not only improving the care and management of their coffee trees but also expanding the area dedicated to coffee cultivation. According to Vicofa, by the end of 2023, the total area under coffee in the country had increased to 718,000 hectares and will continue to expand in 2024, as demand for coffee seedlings continues to grow. The average yield of Vietnamese coffee crops increased from 2.7 to 2.9 tons/ha in 2023, an increase of 0.8% over the last 3 years. This production scenario, if the weather cooperates, should start to yield results over the next few years, which could considerably boost the robusta supply from Vietnam.