Earlier, as market concerns over a tightening global coffee supply intensified, coffee futures prices kept rising. New York arabica futures rose 4%, hitting a historic high of 343.4 cents per pound, and the industry price benchmark, the U.S. C coffee futures price, also reached a high of 348.3.

But yesterday, US C coffee futures began to fall, returning to the level of 319.6 cents/lb. In addition, Robusta futures prices continued to decline, once falling to 5,059.5 USD/tonne. It is said that the price correction may be a reflection of the market supply and demand relationship being revised once again.

In addition, according to relevant reports, due to the recent interest rate hike by Brazil's central bank, the benchmark interest rate was raised to 12.25%. High interest rates will increase the cost of exported goods, which in turn will lead to higher Brazilian coffee prices. Moreover, Brazilian traders have slowed down coffee sales in order to secure future coffee inventories. Therefore, traders began to turn to purchasing cheaper coffee beans, thus increasing their purchases of Vietnamese Robusta coffee.

In addition, the United States Department of Agriculture (USDA) recently also issued a report on Vietnam's coffee industry, in which it estimated Vietnam's coffee production for the 2024/25 crop year at 30.1 million bags (60 kg/bag), of which Robusta coffee production is 29 million bags and Arabica coffee production is estimated at 1.1 million bags. Although this is less than the figure forecast earlier in June, it is an increase from the 27.5 million bags of coffee production in the 2023/24 crop year.

It is understood that although Vietnam suffered severe drought between March and May this year, causing the land to crack and water shortages, which seriously affected the growth of coffee trees, and then welcomed heavy rain during the harvest season, ultimately causing coffee production to decline. However, according to the report, thanks to the continuous rise in coffee prices in recent times, farmers' incomes have increased, and investment in coffee cultivation has increased, helping Vietnam's coffee output recover amid the drought and reducing losses.

Currently, Vietnam is in the middle of its harvest season. According to the chairman of the Vietnam Coffee and Cocoa Association (VICOFA), heavy rains during this year's harvest season delayed the harvest work, but this year most farmers picked cherries that were more mature, of better quality and heavier in weight. As a result, output will increase, which will also benefit exports.

However, the market is still somewhat concerned about the climate. Recently, the World Meteorological Organization released its latest forecast: between December 2024 and February 2025, there is a 55% chance of a shift from the current neutral state to La Niña, but this La Niña is expected to be relatively weak and short-lived.

In addition, the organization also stated that El Nino conditions appeared at the start of this year, and even if La Nina does occur in December, its short-term cooling effect will not be enough to offset the warming effect brought by record greenhouse gases. After May of this year, neither El Nino nor La Nina conditions appeared, yet the globe still experienced a series of extreme weather events, including record rainfall and flooding, as well as severe drought and high temperatures in many regions, and these have become the new normal of climate change.

Therefore, some industry insiders say that current weather concerns continue to put pressure on soft commodities, and coffee prices may fluctuate further next year. In addition, the coffee industry will also see supply chain instability further intensified by factors such as geopolitics, conflict and labor shortages, and because coffee trees have a long growth cycle, even large-scale planting now still requires nearly 5 years before they mature and begin to bear fruit, so coffee prices are expected to remain high over the next 3 to 5 years.

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