Stocks of coffee producers less appealing on market

As of the start of 2023, domestic coffee prices have risen by approximately 20% since the end of 2022, reaching 48,000 VND per kg (equivalent to 2.05 USD per kg) and inching closer to the peak recorded in August of 2022.

This increase can be attributed to the upward momentum of coffee prices in international markets, triggered by discouraging news concerning Brazil's coffee production.

After a decline in January, Vietnam's coffee exports soared in February. In the first two months of 2023, coffee exports only decreased 9.5% in value and 7.8% in volume.

The average export price during the period was 2,177 USD a tonne, down 1.9% on-year but up 1% compared to last December. Coffee export turnover is estimated to continue to increase in March.

Some coffee exporters expect that demand for coffee beans in 2023 will increase. If Brazil's output is again hampered by unfavourable weather, coffee prices could peak from a year ago or possibly go higher.

The majority of the supply of arabica coffee in Vietnam has currently been purchased. On the other hand, the country's coffee output is forecast to slide. In the crop year of 2022/23, coffee production is expected to decrease by 10-15% over last year to about 1.47 million tonnes, according to the Vietnam Cocoa Coffee Association (Vicofa). Reduction in coffee growing areas as farmers switch to other, more effective crops such as durian, avocado, or intercropping in the garden was attributed to the fall in outputs.

Last year, Vietnam was the world's second-largest coffee exporter, with more than 1.78 million tonnes, worth over 4 billion USD and an average price of 2,293 USD per tonne.

However, Vicofa said that the country's coffee industry still faces many challenges in the balance of supply and demand, the prosperity of coffee growers, accountability, domestic consumption, climate change, and new regulations of other import countries.

On the stock market, the group of coffee businesses is mainly small-scale, and the stock price from the beginning of 2023 to now has been traded flat and has low liquidity, such as the PCF of Petec Coffee JSC. Some stocks haven't recorded any transactions in many months, like TAN of Thuan An Coffee JSC, FGL of Gia Lai Coffee JSC, and CPA of Phuoc An Coffee JSC.

A stock witnessing notable performances recently is CFV of Thang Loi Coffee JSC. It has recorded two long streaks of hitting the ceiling price, with the first occurring in 23 consecutive sessions from August 15, 2022, to September 16, 2022. During the period, the company's stocks surged from 4,300 VND a share to 91,300 VND a share. However, the trading volume was small, with only 100 units transferred in many sessions.

Thang Loi Coffee suspected some individuals manipulated its stock prices for personal motives, as it is unusual for stocks to continuously increase to the ceiling with such a low trading volume.

The second time CFV continuously hit the ceiling price was from February 20 to March 9, equivalent to 14 consecutive sessions, pulling the stock price from 8,600 VND to 67,600 VND a share. Its liquidity increased from a few hundred units to 2,000 - 5,300 units per session.

This time, the company said that the continuous rallies in the stock price were due to the movements of the stock market and had no background to explain. In 2022, Thang Loi Coffee posted net revenue of nearly 450.7 billion VND, an increase of 28% on-year, while profit after tax dipped 77.5% to 1.3 billion VND. Notably, its operating profit was negative 1.2 billion VND, while in 2021, it gained more than 6 billion VND./