Vietnam, the world’s top robusta coffee supplier, faces a standoff as farmers demand renegotiations in the wake of a 28-year price peak. The impasse intensifies the rally in robusta prices, particularly impacting European supplies.

Struggling with its weakest crop in six years during the 2022/23 season, Vietnam rolled forward contracts into 2023/24, banking on a strong harvest to meet obligations. However, this season’s yield fell short, prompting farmers to seek contract adjustments.

Heightened prices due to poor crops led farmers to reconsider delivering at previously agreed rates, resulting in renegotiation attempts.

“We didn’t breach contracts. With rising prices, we negotiated anew. Currently, we only sell if buyers meet our revised terms,” shared a Vietnamese farmer from Dak Lak, speaking anonymously.

Initially impacting local dealers, the standoff now ripples through global markets, tightening supplies and propelling the benchmark world price index to its highest since 1995.

It’s estimated that 1-2 million bags of last season’s pre-sold Vietnamese coffee, representing up to 8.5% of the country’s exports, faced delays due to the previous season’s poor harvest.

While some delayed coffee has been delivered, it further reduces available stock this season, fueling the price surge.

All major global traders in Vietnam, including Louis Dreyfus Company, Sucafina, Volcafe, and Neumann Kaffee Gruppe, are affected, impacting world prices due to their significant trading volumes.

Vietnam, responsible for over a third of global robusta production, harvested 26.3 million bags last season, the lowest in six years, with this season projected at 26.6 million, according to USDA data.

Amid dwindling supplies, many turn to ICE Futures Europe for coffee trading, leading to declining stocks.

ICE-certified robusta stocks hit 10-year lows, influencing ICE futures prices upward, as falling stocks signal market tightness.