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Vietnamese Coffee Not Going To Chicago: Vicofa

Vietnamese Coffee Not Going To Chicago: Vicofa

Doan Trieu Nhan, Deputy Chairman of the Vietnam Coffee and Cocoa Association, denied the news that Vietnamese coffee would be traded on the Chicago Mercantile Exchange (CME).

“I know mass media recently reported that Vietnam would put coffee up for transactions at CME. I can say that the news is not true,” Mr Nhan said.

According to Mr Nhan, a lot of prestigious foreign coffee enterprises and associations called him, asking why Vietnam had decided to take coffee to CME while it did not have to do that. While Vietnam’s annual coffee output is not enough for export, and foreign dealers even fly to Vietnam to seek supplies, it is not necessary to take coffee abroad to sell.

When asked to clarify the news about the working session between Deputy Prime Minister Pham Gia Khiem and CME leaders, Mr Nhan confirmed that Mr Khiem once visited CME. The two sides signed a memorandum of understanding on cooperation in the field of coffee trading. Deputy Minister of Agriculture and Rural Development Luong Le Phuong held a meeting to discuss the very important cooperation.

In fact, CME will help Vietnam build up the coffee trading floor in Dak Lak by upgrading it into an internationally standardised trading floor. With the experience and support of CME, Vietnam hopes to create a modern, dynamic and effective trading floor. The success of the coffee trading floor will help much in building other floors for trading other farm produce, including rice, vegetables and fruits.

In related news, Vicofa has advised its members to think carefully before signing export contracts, saying that the coffee price will increase as a result of the supply shortage.

The 2006-2007 crop was considered a bumper crop, with Vietnam’s output nearly 1mil tonnes and Brazil’s 2mil tonnes. However, the output was not enough to meet the demand which increased sharply because traders, anticipating the coffee shortage of the next crop, bought in large quantities.

Experts have warned that the 2008 crop will be a failure crop in accordance with the two-year cycle. According to Mr Nhan, the coffee price at this moment is relatively high, but just a half of the peak price seen in 1995-1996. The coffee price hit its peak at $3,000/tonne in 1995.

Coffee trading in the world has been developing very well in recent years. In June 2007, for example, trade volume had increased by 33% over the same period of the previous year, from 6.7mil bags in June 2006 to 9.7mil bags in June 2007.

Vietnam’s coffee exports in the first half of the year increased by 20% over the same period of last year. In the 2006-2007 crop, exports increased by 74% over 2005-2006, from 589,000 tonnes to 884,000 tonnes.

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