Analyze, Evaluate Current Coffee Price Situation, Forecast Next Week, and Coffee Price Prediction March, 2023: Update the latest forecasts and predictions on coffee prices next week and in 2023, according to the analysis of domestic and international experts. Coffee futures prices on two exchanges had a solid increase weekly and a downward correction at the end of the week. So what will happen next week?
Coffee price forecast next week
The outlook for next week could be a slight downtrend as it has fallen into the overbought zone. Contributing to the decrease in the price of coffee on both exchanges was also because the USD remained at a high level.
Standard inventories of the ICE London exchange recorded an increase of 6,110 tons, to 65,650 tons, as of February 23. The above information may hurt Robusta coffee, causing Robusta coffee prices to fall next week.
Inventories that meet the standards of the ICE New York exchange continue to record a decrease to a 7-week low of 809,566 bags as of February 23. The above information may slow down the price of Arabica coffee.
The dollar maintained a slight gain after the release of US economic data, supporting the Fed’s continued tightening of monetary policy to curb inflation.
Coffee price trend in next week
Robusta coffee price trend
It is forecasted that in the short term, Robusta price will still struggle to accumulate to gain strength and re-exploit the resistance area of 2230 – 2250. On the contrary, 2080-2100 is an immediate support area of the price.
Price trend of Arabica coffee
The level of 185.5 is the near support point of Arabica coffee price. In the short term, Arabica’s price is still struggling to accumulate to detect the resistance level of 200.
General forecast of the coffee market
- According to the forecast of the Vietnam Commodity Exchange, the price of coffee will continue to fluctuate according to changes in supply and demand. In 2023, if major central banks still decide to pursue a tight monetary policy, and the world economic picture will continue to be bleak. Following that, the consumption demand for coffee will be challenging to recover, even dropping sharply next year.
- Information from the Commodity Exchange of Vietnam (MXV), in the context of the global economic downturn from the beginning of the year until now, the demand for coffee is likely to weaken. This decline comes from the fact that coffee is a non-essential commodity and highly dependent on the economy’s health. However, consumption will not change much, especially in long-term consumption markets.
- Fluctuations in the USD exchange rate against other currencies and high inflation in many countries, especially in the US and Europe, have raised concerns that global coffee demand will decline as consumers tighten spending.
See more information about coffee prices today in the Central Highlands and the world market.
Coffee prices are forecasted to recover due to the limited supply
- The Import-Export Department predicts that coffee prices will likely recover thanks to supportive information such as the ICE – London inventory report continuing to fall deeply to a 4.5-year low.
- In addition, the weather is not favorable for harvesting and drying coffee at the end of the crop in the Central Highlands coffee region of Vietnam.
- According to data from the National Coffee Federation of Colombia (FNC), the world’s second-largest coffee producer ended 2022 with a 12% decrease in arabica production; exports in 2022 reached 11.4 million bags, down 8% compared to 2021.
Forecast of Vietnam’s coffee exports
Vietnam’s coffee industry has just experienced a “booming” year with a record-high export turnover of more than 4 billion USD, up 32% compared to 2021. However, entering 2023, export sales are forecasted to slow down because the supply was not as abundant as the previous year. The price of coffee tended to decrease because the world supply-demand changed from shortage to surplus.
- Exports at the beginning of the 2022-2023 crop year are still quite favorable. Still, some forecasts suggest that coffee exports in 2023 may decrease because the supply is not as abundant as the previous year, while the price of coffee tends to decline due to the lack of supply. – world coffee demand shifts from shortage to surplus.
- According to a recent report by the US Department of Agriculture (USDA), global coffee production is forecast to increase by 6.6 million bags from the previous crop year to 172.8 million in the 2022-2023 crop. Global coffee consumption is forecast to increase by just over 800,000 backpacks to 167.9 million bags. Thus, the world coffee supply will exceed demand by 4.8 million bags in 2022-2023.
- Vietnam’s coffee exports in the 2022-2023 are forecast to decrease by 1.5 million bags to 24.5 million bags due to lower supply.
- Sharing the same comment, Mr. Do Ha Nam, Chairman of the Board of Directors of Intimex Group Joint Stock Company, said that the amount of coffee exported in the 2022-2023 crop year is expected to decrease sharply compared to the previous year due to the inventory from the 2021-2022 crop to an estimate. Incalculable.
- Meanwhile, this year’s coffee crop production is also forecast to decrease. According to VICOFA, output in the 2022-2023 crop is expected to reduce by about 10-15% compared to the 2021-2022 crop year to about 1.47 million tons. The main reason is that the area planted for coffee tends to decrease as people switch to other more efficient crops such as durian, avocado, or intercropping in the garden.
- However, Mr. Nam said that the rate of goods meeting the standards of glyphosate contamination of Vietnamese coffee, which is assessed at a reasonable level, is the main competitive advantage compared to Brazilian Robusta. The European Union is warning that it will continue to tighten in the coming years.
- In addition, freight rates to Europe and the US are decreasing sharply and stably compared to 2020-2021.
Coffee Price Prediction March, 2023
Commenting on the price of coffee in 2023, expert Edison Nguyen (Co-founder of Helena., JSC) said that the critical point of the market is the plan to increase interest rates of consuming countries. This is a drag on the market, Mr. Edison assessed, the first phase of the year will continue to struggle, the market will be clearer at the end of the year when there is a relative view of the Brazilian harvest in April 2023.
The Import-Export Department forecasts that world coffee prices will continue to be under downward pressure. Fears of a global economic slowdown, while the world’s top coffee producing countries are headed for a record crop in 2023.
It is possible that facing the pressure of raising US interest rates and tightening credit, traders on the exchange had to liquidate more or less short contracts.
If so, the derivative price is still weak in the first 3 months of the crop year. But in the first half of 2023, due to the small Brazilian crop as a rule, they can return to buy, at the same time as the program of increasing interest rates of banks, only to hope that the price of coffee derivatives is somewhat better.
Global coffee consumption will increase 1-2%/year by 2030
- Global coffee consumption is likely to grow by 1-2% per year until 2030, or 25 million 60kg bags over the next eight years, according to International Coffee Organization (ICO) Executive Director Ms. Nogueira.
- Even so, the ICO representative said the agency is being more cautious with a short-term forecast, considering all the events facing the world, including high inflation in Europe. Europe.
- Answering Bloomberg , Ms. Vanusia Nogueira said that the global coffee industry will achieve a balance of supply and demand in the next 2-3 years to get rid of the current supply shortage.
- The world needs more arabica and robusta coffee, but the prospect of increased production and demand for Robusta will be higher. Traditional arabica producers are trying to switch to Robusta as the world warms, while roasters are also trying to add cheaper Robusta to their blends.
Forecast of coffee production and consumption on March, 2023
- The USDA report said that global coffee production is forecast to increase by 6.6 million bags from the previous crop year to 172.8 million bags in the 2022-2023 crop year. Mainly because Brazil’s arabica coffee trees enter the harvest year according to the biennial production cycle.
- Meanwhile, global coffee consumption is expected to increase by more than 800,000 bags to 167.9 million bags, with increases mainly in the European Union, the US and Brazil. Thus, world coffee supply will exceed demand by 4.8 million bags in the crop year 2022-2023.
- USDA also forecasts that world coffee exports will decrease by 3 million bags in the 2022-2023 crop year to 116.1 million bags. Declines were recorded in Brazil, Vietnam, and India but increased in Honduras and Colombia. Ending stocks are expected to increase by more than 1.5 million bags to 34.1 million bags.
- Amid improved supply, global coffee prices tracked by the International Coffee Organization (ICO) have fallen by more than 25% since February 2022.
- USDA believes that the widening gap between the price of arabica compared to Robusta and Robusta of Vietnam compared to other countries will support Vietnam’s exports in the new season.
- Brazil: USDA forecasts Brazilian arabica production will increase by 3.4 million bags to 39.8 million bags. Most of the producing regions are amid a biennial crop year, leading to higher yield prospects for the next crop. However, this is still far below the peak of nearly 50 million bags in the 2020-2021 and 2018-2019 seasons.
- Vietnam: The output of Vietnam, the world’s second-largest coffee exporter, is forecast at 30.2 million bags in the 2022-2023 crop year, down 1.4 million bags from the previous record harvest. . Vietnam’s production area is generally unchanged with more than 95% of the output still being robusta coffee.
- Colombia: Colombia’s production of arabica coffee in the 2022-2023 crop year is forecast to increase by 800,000 bags to 12.6 million bags, thanks to improved production conditions. The previous crop of Colombia coffee production was negatively affected by heavy rain and cloud cover that disrupted flowering. Colombica’s coffee exports are expected to increase by 500,000 bags to 11.5 million bags due to a recovery in supply, with the main export markets being the US and EU.
- Indonesia: Indonesia’s coffee production is forecast to increase by nearly 800,000 bags year-on-year to 11.4 million bags. Robusta production alone is expected to reach 10 million bags thanks to favorable production conditions in the lowlands of South Sumatra and Java, where about 75% of the coffee area is grown.
- India: India’s robusta production will increase by 170,000 bags year-on-year to 4.9 million bags in MY 2022-2023, thanks to higher yields. India has now become the world’s fifth-largest producer of Robusta after Vietnam, Brazil, Indonesia, and Uganda. In contrast, India’s arabica production is only 1.3 million bags, ranking 12th globally.
Imports from Europe and the US are forecast to decrease
- The European Union’s coffee imports in 2022-2023 are forecast to decline by 2.1 million bags to 44.5 million bags, accounting for 40% of global coffee imports. Top suppliers include Brazil (40%), Vietnam (20%), Uganda (8%), and Honduras (7%).
- EU ending stocks are forecast to fall by 1 million bags to 13 million bags to accommodate slight growth in consumption.
- The US continues to be the world’s second largest importer of green coffee in the 2022-2023 crop year, with a volume of 24.8 million bags, a decrease of 500,000 bags compared to the 2021-2022 crop year. Top suppliers include Brazil (30%), Colombia (19%), Vietnam (10%), and Honduras (7%). US stocks are forecast to decline slightly to 6.1 million bags in the 2022-2023 season.
What factors will strongly affect coffee prices on March 2023?
According to Helena Coffee Vietnam, in 2023, the world market will not only continue to be “hot” with economic and financial news, most of which seem to be unfavorable to commodity prices but also the time factor. Weather, Earth’s temperature is getting warmer…
- If there is a widespread drought, that is the biggest concern, more than the frost. Because frost is only in Brazil, and deficiency, a large production area around the Pacific Rim, and of course, not only coffee but also other agricultural products are affected.
- If the global average temperature increases by 1.5 degrees Celsius is considered a protective threshold, but if it exceeds that threshold, the climate will change and become dangerous. Higher temperatures mean severe drought. The drought that reduces crop yields in many parts of the world is inevitable.
- In 2022, extreme weather will reduce harvests in China, India, South America, and Europe, increasing food insecurity. Therefore, food stocks in 2023 may be lower than usual.
- If there is another bad harvest, agricultural prices will have to adjust no matter how central banks regulate. The result would be that food shortages in most countries could lead to civil unrest, while rising prices in the developed world would further fuel inflation and a cost-of-living crisis.
Helena coffee experts added that the weather might intervene if the economic and financial situation is unfavorable for coffee prices in 2023. If El Nino is in the second half of 2023, speculators will buy back to help coffee prices rise.
What is the scenario for coffee prices on March 2023?
- In 2023, major central banks still decide to pursue tight monetary policies to bring inflation back to the target level, and the world economic picture will be bleak. Accordingly, the consumption demand for coffee will be challenging to recover and even drop sharply next year.
- IMF has cut its forecast for global economic growth in 2023 from 3.6% in April to 2.7%; this growth is lower than the forecast of 3.2% for 2022. The euro area and the US are the two largest coffee-consuming markets globally, with modest growth rates of 0.5% and 1%, respectively.
- However, according to the latest updated data on the coffee crop year 2022/2023, USDA, the two top arabica exporting countries, Brazil and Colombia, revised their output compared to the mid-year report. It may help coffee prices limit the weakening momentum shortly.
- For Brazil, the USDA has cut output for the current crop year to 62.6 million bags, 1.7 million bags less than reported in June. Weak production led to a 2 percent drop in exports: Four million bags, about 36.65 million bags, the lowest level in the last four years. In Colombia, production is forecast to decrease slightly by 3.1% from the previous report to 12.6 million bags, and supply exports are to be cut by 2.3% compared to the previous forecast.
- Meanwhile, the supply in Robusta exporting countries is more optimistic, which may pressure prices shortly. Although production is still forecast to weaken slightly from the previous report, at 30.22 million bags, exports in Vietnam are estimated to increase slightly to 27.65 million bags. In Indonesia, the world’s third largest exporter of Robusta, both output and exports are more positively forecasted by USDA, with an increase of 7% and 1.5%, respectively.
- In the longer term, the market will react more strongly to coffee production predictions in the year 2023/2024 by the top exporting countries. Although it is pretty early to predict the exact supply next season, the market also has more positive expectations compared to the previous season before La Nina will be less harsh. In Brazil, although there are mixed views on coffee production in the next crop year, analysts agree that output will be at least on par with the current crop.
- Under pressure from the continued weakening of consumer demand due to fears of economic recession, world coffee prices in general and Vietnam, in particular, will continue the downward trend. However, the decline of coffee will be adjusted slowly because the supply is not as positive as the market expected.
- Thus, the general scenario for coffee prices will continue to go down, but the downward momentum will be adjusted compared to the current one. Specifically, the cost of Arabica on the US ICE Department can be traded at the price range of 180 – 190 cents, the Robusta price on the EU ICE Department will also slow down and fluctuate in the field of 1,900 – 2,300 USD, and the domestic price in Vietnam will fluctuate in the price range from 45,000 to 48,000 VND/kg.