Crisis in Vietnam Robusta Differentials – One Year Later

Exactly one year ago the Vietnamese differentials peaked at unbelievable high levels, a new high far higher than any historical numbers: an incredible +900 usd/mt and holding firm around plus 700 until end of July.

In recent weeks there has been speculation about whether differentials will be replaced completely by outright priced business. In our opinion, both differential and flat price business have coexisted for many years and will continue to do so. In fact, we have a prediction:

We will see firm but stable differentials for Vietnam until early August. During August until early December, we expect falling differentials and from December towards end of January a stabilization and slow recovery. Of course, all of this could be changed by a frost in Brazil or other natural or manmade “act of God”.

In this blog, I will talk about what happened last year, then highlight some of the key risks that we are watching, and finally I will tell you why we expect the scenario to unfold as outlined.

[Looking for reliable data on Vietnam’s coffee market? We’ve got you covered. Reach out to info@coffeetradingacademy.com to get more information or try our reports for free.]

Let us start with that unique time period where Vietnams diffs reached their historic highs at +900.

This was caused by massive export shipments during Nov-23 until Feb-24 which drew down inventories and left the local market exposed with minimal volumes and strong demand.

These shipments were the delayed contracts from crop 22/23 plus a huge number of new contracts entered between September 2023 and December 2023.  At the time, outright prices were considered very good for farmers and exporters, so they had no problem booking trades at differentials between level and plus 100.

These high prices wouldn’t last though.  Competition from Brazilian Conillon and the subsequent industry switch from Vietnam to Brazil, combined with the futures rally from 4200 to 5200, collapsed differentials.

By the end of February 2025, Vietnam differentials had now reached their lowest level in years, -320.  Since then, the experienced a significant shift from minus 320 towards level money by the end of March 2025, mirroring a market decrease from 5,700 to 5,300.

This brings us to the present. Differentials have been oscillating with market fluctuations between plus 150 and minus 120 since end of March.

However, the questions before us now are 1) where will Vietnam differentials trade between now and the arrival of the new crop? and 2) What will happen before the TET holidays in mid-February 2026? 3) will there be a similar crisis as to 2024?

[Contact info@coffeetradingacademy.com for access or a complimentary FREE trial of our Premium Vietnam Reports.]

We believe that in this case, history will not repeat itself and we won’t see plus 800 differentials again.

The primary reason for this is that we didn’t witness the same degree of large shipments during the first 4 months of the crop cycle as compared to last year. To the contrary, shipments were lower than previous years and only started to pick up during February this year.

Secondly, there is no squeeze present in the local market, this is in spite of the fact that the supply has drawn down during the past weeks. The exporters and trade houses have sufficient stock (May 25 is +15% yoy) while the farmers have been selling at record high prices.

Thirdly, futures market is looking at best sideways without a frost and thus same or lower futures market means firm differentials, even while the pivot point between plus or negative differentials has moved lower from 5’300 to 5’000.

USDA reported that they expect a Vietnam 25/26 crop of 31 million bags (30 Robustas 1 Arabica). We at Elite Insights, reported last November that we foresee the next crop 25/26 at 31.3 million bags after our crop survey.

(If you would like to be one of the first to know this key crop estimate, you can subscribe to our crop report due 2nd Half of June) to be the first one to learn if this initial number will be confirmed, increased or decreased.)

As a sizable crop approaches this November, we can expect to encounter selling pressure leading up to the harvest. Local exporters require actual export contracts to secure the funds needed to buy coffee from the middlemen.

This pressure will inevitably lead to lower differentials; we witnessed the same last year from August onwards.

[Email us at info@coffeetradingacademy.com for more details or a free trial of our Vietnam reports.]

Once this selling pressure is over, during December, all focus is on purchasing and receiving new crop coffee, the differentials tend to stabilize and slowly firm again.

The seasonality charts further strengthen our view that we will see firm or sideways differentials and from August onwards weaker.

And yes, of course, if prices rally siginificantly from a frost or other big unforeseen event, we will see diffs fall already in June or July.

We wish you good trades.

Elite Insights – Vietnam Coffee Reports – A Joint Venture with Coffee Trading Academy

Are you looking for consistent and experienced, first-hand insight and crop survey reports on Vietnam Coffee?

Contact us at info@coffeetradingacademy.com for more information or to engage a free trial of our services.