Coffee prices in Vietnam have continued to increase this week as global prices show signs of recovery from recent lows.

According to data from the Vietnam Coffee and Cocoa Association (Vicofa), robusta coffee prices averaged 82,100 VND ($3.50) per kilogram in Vietnam's Central Highlands as of February 22nd, up around 300-400 VND from the previous day. This marks the fourth consecutive day of price hikes in the domestic market.

The price increases in Vietnam mirrored gains in global coffee futures markets. On the Intercontinental Exchange, robusta coffee futures on the March 2024 contract settled at $3,252 per tonne on February 22nd, up from $3,232 on the previous session. The May 2024 contract closed at $3,177 per tonne.

On the New York Board of Trade, arabica coffee futures also ended slightly higher. The May 2024 contract settled at 188.10 US cents per pound, up from 187.45 cents the previous day. Brazil's ICE arabica contracts showed mixed movements but ended mostly firmer as well.

According to market analysts, coffee futures markets took support from a recovery in the Brazilian real currency against the US dollar. A stronger real encourages Brazilian exporters to sell more coffee. Meanwhile, China's decision to cut interest rates boosted broader market risk appetite.

Inventories of robusta coffee tracked by ICE have continued falling and are now at their lowest levels since 2014. Supplies stood at just 19,600 tonnes as of February 15th compared to over 200,000 tonnes in early 2021. Tightening supplies have provided a floor for global coffee prices recently.

Looking ahead, coffee prices are expected to remain sensitive to global economic conditions and any escalation in supply chain disruptions. Shipping delays and higher costs pose ongoing risks for the market. However, tighter supplies should continue supporting prices near current levels through the first half of 2024 if demand holds up. This bodes well for coffee farmers in Vietnam.