Coffee prices in Vietnam- lockdown affect

According to Fitch Solutions, Vietnam’s Covid-19 blockade has a limited global coffee supply. Coffee prices may remain “relatively high” through 2022.

The government has been dealing with its worst Covid epidemic since the pandemic began. A lockdown in the country’s exporting powerhouse of Ho Chi Minh City has hampered overseas shipments of coffee and other items.

According to customs data, Vietnamese coffee exports declined 8.7 percent from July to 111,697 tonnes in August. Vietnam sold 1.1 million tonnes of coffee between January and August, a 6.4 percent decrease from the previous year. Meanwhile, coffee export earnings increased 2 percent to nearly $2 billion.

The drop in Vietnamese exports, combined with production declines in other major manufacturers, has pushed up worldwide coffee prices. According to Refinitiv data, benchmark arabica coffee futures have risen 45.8 percent this year, while robusta futures have risen 52.2 percent. Brazil, the world’s largest coffee grower, faced frost and drought, causing crop damage. According to Fitch Solutions in a study last week, Colombia’s harvest was also hampered by bad weather. The advent of the “mu” coronavirus type in the country could result in lengthy restrictions and labor shortages, worsening production.

The consultant increased its 2021 forecast for arabica coffee’s average price from 1.35 to 1.60 per pound. It also increased its 2022 projection from 1.25 to 1.50 per pound.

Outlook for coffee

According to Fitch Solutions, covid restrictions could be gradually loosened soon. As a result, Vietnam’s coffee export delays are expected to be brief. According to the consultant, Brazil’s coffee production should also recover “very fast,” as long as bad weather does not recur.

As a result, the global coffee supply could begin to recover in the 2022-2023 season. The average yearly price for arabica is falling to 1.20 per pound in 2023.

According to Fitch Solutions, ongoing government support schemes will boost output in many critical Latin American and Asian manufacturers, including Colombia and Vietnam.

At the same time, consumption growth appears peaking in many of the primary vital consumers, including the EU-27 and Japan.

Covid in Vietnam

According to data provided by Johns Hopkins University, Vietnam, which shares a border with China, recorded only 1,465 Covid cases and 35 deaths last year. However, the number of patients in the country has risen to more than 635,000 as of Tuesday, with over 15,900 deaths.

Like many Southeast Asian neighbors, Vietnam is battling to keep the highly infectious Covid delta strain under control. According to official statistics from Our World in Data, only 5.7 percent of Vietnam’s population have both vaccine shots.

According to Reuters, authorities in Ho Chi Minh City, Vietnam’s business hub and the core of the Covid outbreak ordered a two-week extension of restrictions on Monday.

Vietnam is a critical player in the global industrial supply chain. Movement restrictions and factory closures to combat Covid have harmed the country’s manufacturing production and exports, hurting worldwide supplies of items ranging from coffee to clothes and semiconductors.

Nike, Under Armour, Lululemon, and chipmaker Samsung Electronics, is among the multinational corporations that have experienced difficulties in Vietnam.

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