Agri Commodities

Low Coffee Prices Dog Vietnam’s Coffee Exporters

Low Coffee Prices Dog Vietnam’s Coffee Exporters

Ranking behind Brazil, Vietnam is the second largest exporter of coffee in the world. It Exports Coffee to more than 80 countries across the world as well as territories. The Asian nation accounts for about 14.2% of the market share in 2022. 

Among the total coffee processed in Vietnam, it exports almost 95% of it to Asian countries. Vietnamese coffee varies from the coffee produced and processed in western countries. The difference lies in taste and is due to the type of coffee and the process of brewing. 

Robusta and Arabica varieties of coffee are mostly exported from Vietnam to other countries. Germany is the major importer of Vietnam’s coffee. Other nations importing coffee from Vietnam include Japan, Russia, Europe, the United Kingdom, and the United States. Despite the high demand and production of coffee in Vietnam, the leading Coffee Exporting companies in the country are facing an evident drop in revenue due to decrease in coffee prices. 

Coffee Export From Vietnam 2022-2023 

Having a substantial export volume, Vietnamese coffee exporters are seeing a decline in earnings as prices of coffee are witnessing a downfall. 

In 2022-2023, the price drop might be correlated to the global economy’s deteriorating demand and an excess supply of local coffee.

In late 2022, Coffee in Lâm Đồng Province was distinctively traded at US$1.63 (VNĐ 38,600) per kilo as compared to the selling price of coffee in Đắk Lk, Đắk Nông, or Gia Lai provinces, as it was exported at VNĐ39,200 per kilo. 

The above-mentioned prices were almost 22% less than the coffee export price in last year in the month of August. Besides that, the prices were 5.3% lower than the price in late 2021, due to which the coffee exporter’s income dropped. 

Vietnam National Coffee Company (Vinacafe) reported net income of VNĐ1.8 trillion ($76.4 million) last year, falling 10% year on year, leading to a loss of VNĐ19 billion. 

The head of Vinacafe’s Import and Export Department, Nguyn Quc An, disclosed that the company will take a conservative path to conduct business this year in order to mitigate hazards. As a result, broadening its market reach would no longer be a top focus. 

Local raw coffee of Vietnam costs were roughly 3% lower than what Vinacafe might achieve from exports in late 2022. To avoid further losses, the firm had to halt the signing of new export agreements. 

Low Prices Of Vietnam’s Coffee 

Intimex Group Joint Stock Company is the top coffee exporting firm in Vietnam. Intimex-JSC is also facing a loss due to decrease in coffee prices. Due to the bad market situation, the company faced a plunge in

coffee exports in the previous 6 months in 2022. In addition, Intimex-JSC also experienced a violent rivalry from Indonesian robusta. 

The Chairman of Intimex Đỗ Hà Nam estimated that the export of coffee will continue to decrease between 2022-2023 in comparison to the export data of 2021-2022. 

However, Intimex Chairman believes that Vietnamese coffee will likely remain popular on a global scale because of its low glyphosate residues, which have given it a competitive edge against Brazilian robusta. 

Thng Li Coffee Joint Stock Company is another exporter of coffee that has suffered economically as a result of decreased coffee prices. In 2022, the firm earned just VNĐ1.2 billion, a 28% decrease year on year. 

Despite robust sales during the year, the business stated the price drop impacted its profit margin by 3.3 %. However, its expenditures increased by 32.5% to VNĐ451 billion, resulting in reduced profitability. 

The Bottom Line 

The Agency of Foreign Trade, under the Ministry of Industry and Trade of Vietnam, anticipates that the market scenario would improve by the Q1 end as international coffee consumption is estimated to rise due to declining global inflation, resulting in a rebound of coffee prices. 

Coffee prices throughout the world have begun to surge by 12%, reaching over $2,053 per tonne. Domestic robusta values maintained

the optimistic pattern, hitting over VNĐ42,800 per kilo in January and maintaining consistency in early February. 

According to the US Department of Agriculture (USDA), worldwide consumption of coffee will climb to 167.9 million bags between 2022 and 2023. 

In addition, it is also anticipated that the market would experience an oversupply of 4.8 million bags, resulting in a three million bag drop in worldwide exports of coffee. Thus, the major exporting countries like Brazil, Vietnam and India would have to tolerate the brunt of oversupply. 

Nevertheless, the International Coffee Organization predicted that worldwide coffee consumption would reach 170.3 million bags in 2022 and 2023, an increase of 3.3% year on year. The total is predicted to outnumber worldwide coffee output by 3.1 million bags. 

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