Over a month ago, with coffee prices hovering around 84,000 dong per kilogram, Hoang Oanh from Dak Lak decided to sell her entire 5-ton stock. She worried that Brazil's upcoming harvest would increase supply and drive prices even lower. Now, as prices climb toward 100,000 dong per kilogram, Oanh can only express regret for having no coffee left to sell.

"At the time, I feared prices would drop to 70,000 dong per kilogram, so I decided to sell immediately, even though I didn't urgently need the money", she said.

Hoang Oanh is not alone; many farmers in the Central Highlands sold most of their coffee inventory when prices sharply declined in early June. Consequently, this current price surge occurs amidst limited remaining stock held by farmers.

During the morning trading session on 15/7, coffee prices in Gia Lai, Dak Lak, and Dak Nong simultaneously increased by 1,200 dong per kilogram compared to the previous day, reaching 97,300 dong per kilogram. This marks an approximate 15,4% recovery from the two-year low of 84,300 dong per kilogram recorded on 10/6, bringing the commodity close to the 100,000 dong per kilogram threshold.

Coffee in Kon Tum, Vietnam. Photo: Thai Bana

According to Nguyen Nam Hai, Chairman of the Vietnam Coffee-Cocoa Association, coffee prices are rising due to a confluence of factors, ranging from weather concerns and supply issues to speculative trading on commodity exchanges.

Hai noted that the market previously worried about storms in Brazil delaying the harvest. However, the harvest in the world's largest coffee-producing nation has generally progressed smoothly. Investors remain vigilant about drought risks from climate change and the potential return of El Nino late this year or next, keeping supply concerns elevated.

"The most significant factor currently is trading on commodity exchanges. Speculative funds are continuously buying and selling, causing highly volatile prices", Hai stated.

When prices dropped to the 84,000-85,000 dong per kilogram range in early June, many farmers sold a significant portion of their stock. By the time prices recovered, their remaining inventory was negligible. "Farmers tend to hold onto their goods when they see prices rising, but in reality, there isn't much stock left among the people", he added. Additionally, rising international logistics and shipping costs also contribute to supporting overall price levels.

Data from ICE London, provided by the Vietnam Commodity Exchange (MXV), indicates that certified robusta coffee inventory reached 4,053 lots (40,530 tons) by the end of June. Although this figure represents a slight recovery from the two-year low of 3,631 lots recorded in mid-May, global robusta bean reserves generally remain very low.

Reports from VNCommodities and MXV show that June's supply continued to tighten due to a decrease in Vietnam's domestic stock at the end of the crop year, coupled with a low percentage of export-standard beans. Furthermore, unseasonal rain disrupting coffee cherry harvesting in Brazil implicitly pushed up trading prices on the New York exchange, creating interconnected pressure across the entire market. This situation has severely limited the volume of eligible goods for international auction, keeping ICE inventory critically tight.

Market fluctuations on exchanges also highlight the strong impact of speculative capital on coffee prices. At the close of trading on the night of 14/7 and early morning of 15/7 (Vietnam time), September robusta futures on the London exchange increased by 15 USD, reaching 3,849 USD per ton. During the session, prices briefly surged to 4,033 USD, an increase of nearly 200 USD compared to the previous session.

Conversely, arabica bean prices for the same delivery period on the New York exchange decreased by almost 90 USD, settling at 7,190 USD per ton after briefly rising to 7,770 USD. The wide price swings indicate that current coffee prices are significantly influenced by speculative capital and the activities of financial investment funds, rather than solely reflecting supply-demand dynamics.

Hai believes it is difficult to predict whether coffee prices will surpass the 100,000 dong per kilogram mark, as it depends on developments on international commodity exchanges.

In the long term, the biggest challenge for Vietnam's agricultural sector, particularly coffee, is the European Union Deforestation Regulation (EUDR), slated for implementation from late 2026. Under this regulation, coffee exported to the EU must prove it is not linked to deforestation to be sold on the market.

The EU is currently the world's largest coffee consumer and Vietnam's largest export market, accounting for approximately 40% of its total coffee export value. Vietnam is categorized as a low-risk country for EUDR implementation. In fact, some European importers have already piloted purchasing coffee that meets these standards at prices about 50 USD per ton higher than the market, providing additional incentive for businesses and producers.

Thi Ha