Coffee prices in Vietnam's Central Highlands region have continued an upward trend, setting new record highs. As of February 19th, robusta coffee beans were trading at over VND81,000 (USD3.5) per kilogram in the major coffee growing provinces of the region.

This marks the highest price seen for coffee from the Central Highlands in recent years. Prices have been steadily rising since the beginning of 2022 as supplies tighten due to lower stockpiles from farmers. Traders expect prices to remain elevated in the coming months as Vietnam becomes one of the few significant sources of global coffee supplies during this period.

Dak Nong province currently has the highest prices in the Central Highlands at VND81,600 per kg. Dak Lak and Gia Lai provinces follow closely at VND81,500 and VND81,400 per kg respectively. Meanwhile, Lam Dong province's robusta coffee prices stand at VND80,800 per kg.

According to traders and analysts, the drying up of stocks held by farmers who have already sold off their harvest after the Lunar New Year holidays has put pressure on prices. Many farmers and stockpilers who were able to hold off selling until prices rose above VND80,000 per kg have now released their supplies into the market.

This has tightened available supplies which the trading companies now need to replenish to fulfill their export contracts. As a result, traders have had to continually raise purchase prices to attract sufficient volumes from farmers and intermediaries. The rising global prices have also provided support to domestic rates.

On the international front, robusta coffee futures on the London Exchange fluctuated during the past week but ended lower. The March contract fell by USD118 to USD3,231 per tonne while the May contract closed USD76 lower at USD3,141 per tonne. Daily trading volumes remained well above average levels.

Over on the New York Exchange, arabica coffee futures also declined overall. The March contract dropped 5.45 US cents to 190.85 US cents per pound and the May contract eased back 4.8 US cents to 186.7 US cents per pound. Trading activity was also robust compared to historical levels.

Weather factors and global supply constraints are further supporting coffee prices. The ongoing El Nino weather pattern is expected to persist through mid-2024, potentially reducing crops in major robusta producers such as Brazil and Indonesia. Logistical problems in the Red Sea region have also complicated shipping and raised costs.

Vietnam is predicted to be one of the few reliable suppliers over the coming months. This makes its robusta coffee even more strategic for roasters and trading companies seeking to secure supplies. Most experts anticipate prices will remain elevated as Vietnamese coffee represents an outsized portion of the available inventory until new harvests start in Brazil in April.

Local traders stated that as long as supplies remain relatively tight from farmers, the upward momentum in Central Highlands coffee prices is likely to continue. The market will watch weather conditions and crop forecasts closely for any impacts on the upcoming seasons. Shipping issues will also bear monitoring for implications on the fluidity of the global trade. But for now, Vietnamese coffee appears set to command a substantial price premium internationally.