Vietnam’s Coffee Export Values Increase Despite Lower Volumes

Vietnam's coffee exports to traditional markets have shown a sharp increase in value, even as export volumes have declined. In the first seven months of 2024, Vietnam exported 964,000 tonnes of coffee, earning nearly $3.54 billion. While this represents a 13.8% drop in volume compared to the same period last year. The value surged by 30.9%, highlighting the strong demand for Vietnamese coffee.

The country’s coffee export turnover saw growth in the second quarter of this year, except in Italy. Notably, Arabica coffee exports bucked the trend by showing an increase. While other varieties saw a decline compared to the first quarter. Despite these variations, the overall export turnover for coffee varieties witnessed significant growth compared to the same period last year.

Supply Concerns and Price Implications

Vietnam's coffee supply is expected to remain low until October when the 2024-25 harvest begins. The Ministry of Agriculture and Rural Development reported that the country’s coffee output for the 2023-24 crop year is estimated at 1.47 million tonnes, the lowest in four years, marking a 20% decline from the previous year. This drop in production, coupled with unfavorable weather conditions, is likely to impact the upcoming crop as well.

Without accounting for inventory from the previous year, Vietnam will have only about 200,000 tonnes left for export from now until September. This limited supply is expected to push prices higher, benefiting the Vietnamese coffee industry. According to Bloomberg, global Robusta coffee prices are anticipated to rise sharply due to concerns about reduced supply from Vietnam.

Vietnam’s Role in the Global Coffee Market

As the world’s leading Robusta coffee producer, Vietnam plays a crucial role in global supply. The International Coffee Organisation (ICO) has warned of a potential global shortage of up to 35 million bags (60kg each) of Robusta coffee by 2040. Vietnam's reduced coffee output and the resulting price increase could exacerbate this situation.

Vietnam’s coffee industry, despite facing challenges, stands to benefit from the expected price hikes in the global market. As demand continues to grow, especially in traditional markets, Vietnam's coffee exports are likely to remain a key player in the global coffee trade.

Despite a drop in export volumes, Vietnam's coffee market is experiencing a surge in value, driven by strong demand and limited supply. The upcoming months will be critical as the new harvest begins, with potential price increases expected to shape the market’s future.