As the World Cup approaches, many wonder if there is any connection between coffee prices and the event, and whether they affect each other. I’d like to share my thoughts on this, and though my opinion might not sit well with everyone, I strongly believe that the price of coffee could increase due to its relation to the World Cup.
As previously mentioned by Mr. Kinh Vu, regarding profit preservation and using price hedging tools, unfortunately, Vietnam has not yet created a space where our farmers can participate in and benefit from these tools. I sincerely hope that our government can create a legal framework where financial instruments are controlled by state authorities to ensure a fair and legal market for all participants.
Now, let’s focus on the main question: Will coffee prices rise like in 2010 during the 2014 World Cup in Brazil? The first thing to note is that no one can predict this with certainty, as many factors influence the price. However, there are three key factors that directly impact coffee prices:
1. The Coffee Crop Year
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The coffee crop year in Vietnam runs from October of one year to September of the following year. However, the main months for coffee trading, especially Robusta, fall between November and April. Vietnam plays a key role in supplying coffee globally during these months. The way we sell and trade coffee has a significant influence on the global market.
Historically, we’ve assumed that buyers have the upper hand when it comes to pricing, but the sellers, too, have the power to influence prices. What matters is whether there is someone leading the market effectively. For example, how foreign companies purchase coffee from Vietnam can influence the market.
2. Market Factors & Technical Analysis
Technical analysis charts are based on market data and mathematical algorithms that help predict price movements. Different analysts may have differing views, and conflicting predictions do not necessarily mean one is wrong. The markets often face “bear traps,” where investors are lured into false trends. Monitoring open interest and trading positions can give us insight into market behavior.
3. Political & Social Factors
Political developments worldwide also affect coffee prices, as well as other commodities like oil and gold. For example, geopolitical tensions, such as the South China Sea dispute, can lead to higher shipping costs due to insurance hikes or rising fuel prices. These factors can push coffee prices higher as shipping costs increase.
In today’s globalized market, investors do not just focus on coffee but also invest in multiple commodities, such as oil, gold, and currencies. When one market faces challenges, capital is moved to others, affecting coffee prices.
Conclusion
While the World Cup is a significant event, its impact on coffee prices is more indirect. The main factors affecting prices are seasonal changes, market dynamics, and political developments. We should focus on aspects we can control, such as market behavior, production, and understanding the supply chain. The World Cup may influence trends, but it is the local factors that matter most in determining coffee prices.
Let’s stay focused on what we can influence directly!