A Tale of Two Countries: How Dollar’s Strength Distorts Coffee Market

Vietnamese farmer Y Kua Mlo is storing coffee in his bedroom, unwilling to sell as the strong dollar makes this greenback-denominated commodity less profitable in the dollar-pegged local currency, the dong.  Mr. Mlo’s wife wants him to move into other crops.
In Brazil, João Elvidio Galimberti is planting more coffee because the steep fall of the real against the dollar means the Brazilian crop fetches more.
The strong dollar is picking winners and losers in commodity markets. This trend is helping to rewrite international commodities trade, from wheat to coffee, adding to oversupply in markets like copper and putting further pressure on other resources, like oil, by making it more expensive for many buyers.
In coffee, the dollar-created imbalance between the world’s biggest producers, Vietnam and Brazil, is pressuring the price of robusta, the lower-quality beans that go into instant coffee, by encouraging extra supply from those on the right side of the dollar’s rise and an overhang from those that aren’t.
This could have a long-term impact on coffee production, encouraging Brazilian farmers to grow more beans even as it pushes their Vietnamese peers to move into other crops, such as pepper.