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Pepper Outpaces Coffee in Price Race

24/05/2024 08:51

Pepper and coffee are the duo of key products for the Vietnamese Central Highlands people. Both agricultural commodities entered a "price race" in the second half of 2023, and it is forecasted that both pepper and coffee prices could continue to rise and remain high in the coming time due to supply shortages and unfavorable weather.


According to the Vietnam Pepper and Spice Association (VPSA), in the first 4 months of 2024, Vietnam exported 83,067 tons of various types of pepper, with a total export value of $352 million. Compared to the same period last year, export volume decreased by 19.4%, however, the export value increased by 10.3%.

In the first 4 months of 2024, the average export price of pepper reached $4,214/ton, up 36.4% compared to the same period last year.

VPSA said Asia currently accounts for 36.2% of Vietnam's total pepper export output, however, in the first 4 months of 2024, exports to this region decreased by 52% compared to the same period in 2023. The sharpest decline was in the Chinese market, down 95.2%, while UAE fell 23%.

India is currently the largest importer of Vietnamese pepper in Asia in the first 4 months with 5,552 tons, accounting for 6.7% and an increase of 23.9% compared to the same period. Exports also increased in some markets such as South Korea (up 157.4%), Pakistan (up 59.7%), and the Philippines (up 18.5%).

"In the first 4 months of 2024, the average export price of pepper reached $4,214/ton, up 36.4% compared to the same period last year." 

According to the Vietnam Pepper and Spice Association

Pepper exports to the Americas increased by 40.6% and accounted for 30.2% of the export market share. The United States is currently Vietnam's largest single pepper export market with 22,774 tons, up 45.2% compared to the same period in 2023 and accounting for 27.4% of total export output.

The European region accounted for 26.8% of Vietnam's pepper export market share, up 33.6% compared to the same period last year; with Germany leading at 104.7% increase, followed by the Netherlands (up 52.8%), and Russia (up 68.7%).

Meanwhile, in the African region, exports decreased by 4.7%. However, the traditional market of Egypt is showing positive signs with exports increasing by 10.7% to 1,977 tons after the government provided foreign currency support for import payments.

In the domestic pepper market, with the strong acceleration this week, pepper prices have now surpassed coffee prices by nearly 10,000 VND/kg. At the beginning of last week, pepper and coffee prices were equivalent at 101,000 - 102,000 VND/kg.

However, from May 16, global pepper trading prices unexpectedly surged, causing domestic pepper prices to spike by another 11,000 - 12,000 VND/kg. Currently (as of May 21), the highest pepper price is 112,000 VND/kg recorded in Dak Nong and Dak Lak provinces. The common price in the Southeast and Central Highlands provinces is 111,000 VND/kg.

Pepper prices have risen sharply recently due to limited supply while demand from the US, China, and the EU is increasing. On international trading floors, black pepper prices have continuously increased and are currently standing at $4,900 - $5,200/ton; white pepper ranges from $6,500 - $7,300/ton depending on the type.

According to VPSA, in recent years, low pepper prices led to a decrease in planted areas. Old pepper gardens have been replaced by other crops, especially durian, which is a reason for the continuous rise in pepper prices.


On the New York trading floor, Arabica coffee prices for July 2024 delivery closed slightly higher on Monday (May 20) by 0.10 cents/pound compared to the previous weekend. Meanwhile, Robusta coffee prices on the London floor closed down $19 at $3,499/ton. The recovery of ICE coffee stocks contributed to the slight decline in Robusta coffee prices on Monday (May 20).

Nevertheless, according to analysts, there is still a lot of positive information supporting coffee prices, as Brazil's Real currency strengthened to its highest level in half a week against the US dollar. A stronger Real will limit selling pressure from Brazilian coffee producers.

Meanwhile, insufficient rainfall in Vietnam and Brazil remains a concern that could limit production and drive buying activity. The supply of Robusta coffee remains tight from Vietnam and is expected to continue until the new crop season.

Vietnam Customs reported last Friday that Vietnam's coffee exports in April fell 19.5% year-on-year to 152,073 tons.

"From early May 2024 until now, coffee prices have stagnated, currently fluctuating between 101,000-103,000 VND/kg. Nevertheless, this is still the highest record price ever for coffee."

  Vietnam Coffee and Cocoa Association

According to the Vietnam Coffee and Cocoa Association, last year's El Nino weather event supported the rise in coffee prices recently. Currently, the Central Highlands coffee-growing regions have received rainfall, however, information from various Vietnamese coffee grower forums suggests that the rain may have come too late to save the crop for the 2024/2025 season to be harvested in October 2024. In some areas, the plants may not even be salvageable.

Looking back over the past few years, pepper prices have always been 2-3 times higher than coffee prices. However, pepper prices continuously declined from 2016-2020 and by 2029 had dropped below 40,000 VND/kg to be on par with coffee prices. In 2023, soaring coffee prices left pepper prices behind by 30,000 - 40,000 VND/kg.

Information about decreasing supply and increasing demand has caused coffee prices to rise continuously for over a year, from 38,000 VND/kg in January 2023, reaching 80,000 VND/kg on February 15, 2024, and setting the 100,000 VND/kg mark by late April 2024.

According to the Ministry of Agriculture and Rural Development, Vietnam's coffee exports in April 2024 reached 170,000 tons worth over $644 million, up 3.9% in volume and surging 61.5% in value compared to the same period in 2023.

In the first 4 months of 2024, Vietnam's coffee exports reached nearly 756,000 tons worth over $2.57 billion, up 5.4% in volume and a staggering 57.9% increase in value compared to the same period in 2023. The average coffee export price in April 2024 continued to rise, reaching $3,791/ton, up 55.4% from the same period in 2023.

Due to the continuous increase in domestic coffee prices caused by short supply, some export manufacturers say they have not been able to purchase goods over the past week, causing production capacity to drop sharply by 30-70%. Export contracts have also been suspended as high prices have led partners to shift to importing from India, Brazil, and Indonesia instead. This situation is forecasted to continue until the coffee price fever cools down and global supply increases.


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