Vietnam’s domestic coffee prices fell to the lowest level in six years on Thursday following a decline on the ICE, while Indonesian premiums to July contract widened further to compensate for the global drop.
Farmers in the Central Highlands, Vietnam’s largest coffee growing area, sold coffee COFVN-DAK at 29,000-29,800 dong ($1.24-$1.27) per kg on Thursday, down from 30,300-31,000 dong last week.
“Fresh concerns about the trade war between the United States and China and the strong sales from Brazil have pushed down global robusta prices,” a trader based in the central Highlands said.
July robusta coffee settled down $5, or 0.4 percent, at $1,290 per tonne, after earlier plunging to $1,267, the lowest since March 2010.
According to a report by Khanh Vu, Mas Alina Arifin on Reuters , traders in Vietnam offered 5 percent black and broken grade 2 robusta COFVN-G25-SAI at a $45 per tonne discount to the July contract, flat from last week.
Customs data released on Thursday showed Vietnam’s coffee exports in April falling 16.7 percent from March to 143,296 tonnes, slightly higher than a government forecast of 140,000 tonnes.
Vietnam is the second largest producer in the world after Brazil, with Robusta coffee accounting to 97 per cent of Vietnam’s total output. However, coffee farmers in Vietnam have always experienced cycles of boom and bust since the 1980s, making the industry a highly volatile one. Despite the fluctuating global coffee prices, importing countries continue paying a steady price while coffee farmers from exporting countries experience the daily price range.
Coffee production has been a major source of income for Vietnam since the early 20th century. First introduced by the French in 1857, the Vietnamese coffee industry developed through the plantation system, becoming a major economic force in the country. After an interruption during and immediately following the Vietnam War, production rose once again after Đổi mới economic reforms, making coffee second only to rice in value of agricultural products exported from Vietnam.