Coffee shipments from Vietnam are declining as a result of low inventory, continuous COVID 19 outbreaks, and a drastic shortage in containers. This situation exacerbates the current coffee crisis after the recent frosts in Brazilian coffee crops, which caused a surge in coffee prices. As a result, Arabica prices skyrocketed by 25%, the highest since 2014, which also pushed prices of Robusta higher by 13% – the highest since 2017.
Unfortunately, some Vietnamese coffee farmers cannot benefit from this price surge as they have simply run out of beans. Do Ha Nam, the chairman of the large shipping company, Intimex Group, stated that the company have not bought or sold coffee beans for over a month. Intimex Group and another major exporter, Simexco Daklak, expect this export shortage to continue through September.
On top of that, importers are not buying coffee from Vietnam due to the surge in shipment costs. To send a container from Vietnam to Europe could cost as much as $10,000, which is six to seven times the cost one year ago. The managing director of Quang Minh Coffee Trading, Van Hong Anh, said that his company has “no new contracts to buy beans from farmers” and expects a 20% drop in coffee exports.
Adding on to these logistical problems, the number of COVID-19 cases is drastically rising in coffee-growing areas in Vietnam. The total number of cases in five key coffee-growing regions in the Central Highlands spiked to 300 in just a week, as reported by the country’s Ministry of Health. Some of these regions are under a stay-home order, and the confinement might potentially extend to Dak Lak, another coffee-growing area that produces a third of the country’s coffee.
Coffee businesses are concerned about this spike in COVID-19 cases, and rightly so. Thousands of workers from the south of the country might return to the Central Highlands to avoid the delta variant, which is not good for the coffee regions. Moreover, if the level of infections continues to worsen until November, during the main harvest period, it might slow down the harvesting process, which will affect the crop stock.
Although it’s too early to say for sure, not everyone is pessimistic about this year’s crop prospects. Out of 11 traders surveyed, 5 expect a good harvest, while 2 expect a rise of 6 to 10%. However, the Bureau of Statistics reported exports to be 9% lower than last year.