Recently, arabica futures prices have continued to rise, hitting a 13-year record high.At the same time, this has also driven up robusta coffee futures, which currently stand at 4,981 USD/tonne, once again approaching the 5,000 USD mark. The main reason for the rise in robusta coffee futures is that reduced coffee production in Vietnam has raised market concerns about its coffee supply.

According to a report released by the Vietnam Coffee and Cocoa Association, although Vietnam's 2023/24 coffee crop production was relatively low, Vietnam's coffee export revenue hit a record high. Vietnam exported a total of 1.45 million bags/tonnes of coffee in 2023/24, with export volume down 12.7%, but revenue up 30%, reaching 5.32 billion USD.

The growth in revenue was mainly attributed to higher average coffee export prices, especially robusta coffee, which Vietnam mainly exports; its price has surpassed arabica coffee to reach above 5,000 USD/tonne, setting a record high.

It is reported that earlier this year, between March and May, Vietnam suffered severe drought, with some coffee plants drying out and being damaged, causing very severe production losses, which pushed up robusta prices. In addition, with the EU Deforestation Regulation (EUDR) due to come into effect in December, European coffee traders increased their purchasing efforts, pushing up robusta futures prices, which peaked at 5,572 USD/tonne.

Until October, the European Commission stated that it was necessary to delay the implementation of the EUDR by one year. In addition, Indonesia reported that robusta coffee exports from Sumatra in September increased by 76.36% compared with the same period last year. After these reports were published, robusta coffee futures prices began to fall sharply, and the market believed that prices would fall for a time as Vietnam was about to enter its harvest season.

However, during Vietnam's harvest season, the country was hit by successive typhoons that disrupted coffee harvesting operations. At the end of September, Vietnam was affected by the strongest typhoon, Yagi. According to official statistics, Typhoon Yagi caused 226 deaths in Vietnam, with many people missing, multiple ports and airports suspended, and extensive damage to houses, factories and infrastructure, with economic losses estimated at 3.31 billion USD.

Then, between October and November, Vietnam was again struck by Typhoon Trami and Typhoon Yinxing. These two typhoons were not as severe as Yagi, but they still caused considerable losses. Although these typhoons did not directly destroy coffee-producing areas, the country experienced heavy rainstorms and strong winds, with rainfall reaching 150-250 mm, and in the worst-hit areas possibly exceeding 400 mm, affecting the new crop's coffee production and harvesting work. As a result, large concentrated supply will only be available at the end of November or in December.

However, the Vietnamese coffee industry is currently facing quite a few problems. One is the La Nina phenomenon that may appear in the near future. According to data from the World Meteorological Organization, there is a very high chance that La Nina will appear at the end of the year. Once it appears, it will change Vietnam's rainfall patterns, bringing excessive rainfall and affecting the harvesting of coffee beans.

The second is the implementation of the EUEUDR, as the EU is Vietnam's largest coffee export market. But according to the Vietnam Coffee and Cocoa Association, many coffee farmers in Vietnam grow in relatively scattered areas, and most farms are only 0.5 hectares or smaller, so proving compliance with the EUDR regulations is extremely difficult, and they also face cost issues.

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