Viet Nam’s robusta coffee price in the local market on the Central Highlands dropped to VND50,000/kg on Saturday, from VND50,600/kg earlier last week.
It was an eventful week for the coffee local market, though there were rumours about the frost season in Brazil, the world’s biggest coffee producer and exporter.
For many people in the industry, the current market crop seemed to end earlier than expected.
The Vietnamese coffee crop starts every October and finishes at the end of September the following year.
Since October 2010, the domestic price of robusta coffee has risen more and more, and several times has established new high records in the history.
At certain points, it was at VND51,500-52,000/kg, compared with VND40,000/kg for the 1993/94 crop when Brazilian coffee plantations were hit by a severe frost.
Higher prices have encouraged Vietnamese farmers to sell their last beans in the current market crop, which ended in September.
Some sources estimated that at this moment there were about 300,000 tonnes of stock, including 200,000 tonnes owned by foreign traders and local exporters.
Of that amount, a major part has been committed to sale contracts and 100,000 tonnes are in the hands of wealthy farmers and local investors, who want to wait for a level of VND55,000/kg or higher.
“The current level of coffee prices are high. It was almost at the same level as the close of the London terminal market.”
Buyers’ bids are often lower than the current price in the domestic market, which slows down exports.
Moreover, the bank interest rate in Viet Nam is high, by 24-25 per cent per annum, so local exporters have to change hands quickly.
“The bulk of coffee stock are now in the hands of foreign buyers and traders, who can enjoy much better banking interest rates from their home banks,” said Pham Anh Ky Anh, a coffee expert in HCM City.
The local price fall was in line with the robusta London terminal market.
Since last Monday, the price fell gradually and dropped sharply at the close of the trading day on Friday by US$26 per tonne, and settled at $2,437 per tonne basis in the September trading month on the terminal market.