This week, coffee prices witnessed an upward trend in Vietnam and Indonesia, two of the leading suppliers of robusta beans in Asia, driven by a combination of robust demand and exceptionally constrained supply. In Vietnam, particularly in the central highlands, which is recognized as the country's largest coffee-growing area, farmers have been selling coffee beans at prices ranging from 82,700 to 83,700 dong per kilogram. This marks an increase from the previous week's selling range of 81,600 to 82,500 dong per kilogram. The tight supply situation has led traders to describe the current market condition as challenging, with difficulty in purchasing beans as farmers and dealers are strategic in releasing their stocks.
In the international market, robusta coffee futures for May delivery experienced a slight decrease, settling down at $3,044 per metric ton. Despite this, the premium for 5% black and broken-grade 2 robusta has seen a significant rise, now being offered at a premium range of $400 to $450 per ton to the May contract. This is a notable increase from last week's premium range of $300 to $350, highlighting the current market dynamics where even a $400 premium barely covers the break-even point for some traders.
Vietnam's coffee exports have shown a positive trajectory in the first two months of 2024, with a total of 398,000 metric tons being shipped overseas. This represents a 16.2% increase compared to the same period in the previous year. Correspondingly, the revenue from coffee exports during this period surged by 67.5%, amounting to $1.25 billion, according to the latest government data.
In Indonesia, particularly in Sumatra, robusta coffee beans for April deliveries are now being offered at an $800 premium, an increase from last week's $720. Another trader cited a $700 premium to the May contract, up from the previous week's $640. The rise in coffee prices in Indonesia is attributed to a market condition where demand outstrips supply, as highlighted by traders in the region.
The coffee market in both Vietnam and Indonesia is currently characterized by a tight supply and strong demand scenario, resulting in upward pressure on prices and premiums. As the main harvest season progresses, the dynamics of the coffee market will continue to evolve, influenced by weather conditions, production levels, and global demand patterns.