17.09.2021, 18:04

The Global Supply of Coffee Constrained by Lockdowns in Vietnam, Fitch Says

The Southeast Asian country is the world’s second-largest coffee exporter. The country is battling its worst Covid outbreak since the start of the pandemic, and a lockdown in its exporting hub Ho Chi Minh City has affected overseas shipments of coffee and other goods. Since the 4th outbreak, there have been more than 15,000 people died of COVID-19 in Vietnam. 

In August, Vietnamese coffee exports fell 8.7% from July to 111,697 tonnes, Reuters reported, citing customs data. Between January and August, Vietnam exported 1.1 million tonnes of coffee — 6.4% lower than a year ago, but coffee export revenue rose 2% to around $2 billion, said the news agency.

With export hub Ho Chi Minh City continuing to be under social distancing due to surging number of infections, traders and suppliers told Bloomberg that exporters are struggling to transport beans to its ports for shipment.

Shortage of containers and soaring freight rates have worsened the situation.

The Vietnam Coffee-Cocoa Association has urged the government to ease the curbs.

Earlier this week, Minister of Transport Nguyen Van The said all types of legal goods must be considered "essential" and their transporters must be allowed to pass through COVID checkpoints.

The fall in Vietnam’s exports and production slumps in other top producers have boosted global coffee prices. Benchmark arabica coffee futures have jumped by around 45.8% this year, while robusta futures have surged 52.2%, according to Refinitiv data.

According to CNBC, Brazil, the world’s largest coffee producer, experienced waves of frost and drought that damaged its crops. Bad weather also affected Colombia’s harvest, and the emergence of the “mu” coronavirus variant in the country could lead to prolonged restrictions and labor shortages that worsen production, Fitch Solutions said in a report last week.

“At the same time, we think that demand, at least in Europe and the US, will pick up in the coming months as the lifting of Covid-19 restrictions should enable coffee shops to re-open,” it added.

The consultancy raised its 2021 forecast for the average price of arabica coffee from $1.35 per pound to $1.60 per pound. It also revised upward its projection for 2022 from $1.25 per pound to $1.50 per pound.

Like many of its Southeast Asian neighbors, Vietnam is struggling to contain the highly infectious Covid delta variant. Only 5.7% of Vietnam’s population has been fully vaccinated, official statistics compiled by Our World in Data showed.


Authorities on Monday announced a two-week extension of restrictions in Ho Chi Minh City, Vietnam’s business hub and Covid outbreak epicenter, Reuters reported.

Vietnam plays an important role in the global manufacturing supply chain. Movement curbs and factory closures to fight Covid have hit the country’s manufacturing production and exports — affecting global supplies of goods from coffee to clothing and semiconductors.

Major sports apparel makers Nike, Under Armour and Lululemon; as well as chipmaker Samsung Electronics are among global companies that have faced disruptions in Vietnam.


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