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It is hard to estimate the bottom of coffee prices

(Saigon Times Online) – The current domestic prices of coffee are at 36,000-36,300 dongs/ kg, the lowest prices since 21-12-2010. According to the judgement of coffee traders and experts, coffee prices are showing a continue-to-decrease-and-hard-to-estimate-signal right before the new coffee crop begins.

According Nguyen Quang Binh, a coffee expert, the prices of this agricultural product have already been decreased and are able to continue decreasing so that it is very difficult to guess the lowest price. The reason is that, in his point of view, Vietnam now is no longer able to control coffee prices on global markets.

“A few years ago, when Vietnam suspended to sell out, coffee prices on global markets began to increase immediately. However, although Vietnam does not sell much this year, global coffee prices are still down because Indonesia and Brazil has already sold out large quantities” says Binh.

Pham Van Phuc, sales manager of a coffee exporter in Bao Loc, Lam Dong, comments that it was right that coffee prices were low now and were likely to get worse; therefore, the company had suspended to sign export contracts during this period.

“The coffee prices are at around 36,000 dongs/ kg now and probable to keep going down. Therefore, if export – focused companies like us buy in at this time, we are difficult to offer a competitive price when coffee prices are estimated to decrease in next several weeks” explains Phuc.

Also according to Phuc, the majority of FDI (foreign direct investment) companies want to buy in because those companies have a close relationship withcoffee roasters and coffee producers so that they need to source for their partners. As Vietnamese companies mainly sell coffee to an intermediate, not directly to coffee processing companies so that they cannot buy in at this time because the company will be lost when the prices are down.

Many businesses are hunting for coffee those days because of coffee prices decreased. On September 6th, Mr. H.D, a buying agent at Di Linh, Lam Dong says that he was accepted a high commission by an FDI company to buy coffee for it. However, when exchanging with the Saigon Times Onlineon September 19th, H.D said that the amount of coffee that he bought in the last 3 weeks were not much.

A portal of coffee prices news cited a source of Sterling Smith, a specialist of Citibank that current coffee inventories of Vietnam at the time are about 2.5 million bags (150,000 tons).

Vietnam’s Association of Coffee and Cocoa (VICOFA) in late August informed that Vietnam’s coffee stock volumes inside farmers’ houses were about 140,000 tons after collecting data from local provinces.

According to VICOFA, coffee stocks in farmers’ houses are which coffee prices were above 40,000 dongs/ kilogram previously and were expected to keep rising and achieved 50,000 dongs/ kilogram. Being trusted in this information, many agents in the Central Highlands had bought in and waited for the prices to increase.

In fact, the coffee prices had risen to 46,000 dongs/ kg and then fallen into 36,000 dongs/ kg (the price of 18th and 19th September, 900 dongs/ kg down as compared to the previous day). This is considered a good price for companies of sound finance to buy coffee from local farmers. However, many people do not want to sell out because they may get lost.

To the happening of current coffee prices, VICOFA says that this is very difficult to forecast how domestic coffee prices fluctuate. In early October, Vietnam’s crop year of 2013/2014 will begin; then, coffee harvested volume in farming areas will be abundant to the extent that many people believe that coffee prices will continue going down in next upcoming weeks.

According to the estimation of farmers and experts, the manufacturing cost of coffee is from 32,000 dongs to 40,000 dongs per kilogram. With the current price of coffees, coffee growers do not gain profits and many coffee growers say that they are just “getting break-even by their labor cost”.

»Translated by wscafe.com> original source by The Saigon Times Online, author: Ngoc Hung, for Vietnamese version, please see it here. W/scafe takes its all responsibilities of the accuracy and exactness of the translated documents.

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