Coffee and pepper prices have experienced a continuous surge over the past five days, reaching new highs in Vietnam. On Wednesday, coffee prices hit an unprecedented VND82,500 (US$3.36) per kilogram, while pepper prices rose to VND91,000 per kilogram, marking a VND10,000 increase from the previous week and a total monthly surge of 10-12%.
The upward trajectory in prices is attributed to a combination of high demand and a dwindling supply, prompting many businesses to intensify purchases for export, thereby driving prices even higher. The adverse impact of climate conditions this year, particularly the El Nino phenomenon, is anticipated to substantially reduce yields in both the coffee and pepper sectors.
Vietnam’s pepper production is projected to decrease by 10-15% this year, reaching 160,000-165,000 tons, as reported by the Vietnam Pepper Association. Similarly, coffee production is expected to decline by 10%, with farmers shifting to alternative crops like durian and fruits due to climate change, according to the Vietnam Coffee-Cocoa Association.
The association further suggests that coffee and pepper prices may experience additional increases in June, coinciding with anticipated interest rate cuts by major economies. Vietnam, the world’s second-largest coffee exporter after Brazil, relies significantly on Dak Lak Province, which contributes over 30% of the country’s coffee production, with Buon Me Thuot being a renowned coffee label.
In 2023, Vietnam, as the world’s largest pepper producer, exported 267,000 tons of pepper for $912 million, reflecting a 16.6% increase in volume but a 6% decrease in value compared to the previous year. The average export price stood at around $3,420 per ton, indicating a 19.4% decline from 2022. With these market dynamics and the current trends, the future trajectory of coffee and pepper prices remains uncertain.
