Coffee belt in Vietnam set for rain easing threat of drought

Bloomberg

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The coffee areas in Vietnam, the biggest producer of robusta beans used by Nestle SA, will probably receive rain in coming days, easing concern that dry weather will reduce the harvest in the year starting October. Futures in London slumped to a three-week low.
The Central Highlands should get some precipitation this weekend, next week, and in the first few days of April, MDA Weather Services forecast. The dry season in the region normally lasts well into April with the first significant rains not expected until May, according to Commodity Weather Group.
Robusta pared its biggest annual advance in four years this week after rains aided crops damaged by drought in Brazil, the second-biggest producer. Prices climbed 21 percent in 2014, the most since 2010, after declining last year as Vietnam harvested a record 1.7 million-ton crop. The Vietnam Coffee and Cocoa Association, or Vicofa, said this month that drought will reduce production next season.
“Amounts are not expected to be heavy through next week, and will not likely end drought conditions,” Donald Keeney, a senior agricultural meteorologist at Gaithersburg, Maryland-based MDA, said in response to questions. “However, the rains in the 11-15 day period will be a bit more notable, which will likely result in some more impressive improvements.”
Futures dropped as much as 1.1 percent to $2,014 a metric ton on NYSE Liffe today, the lowest level since Feb. 27. Prices reached $2,218 on March 12, the highest level since October 2012, as farmers in Vietnam slowed the pace of sales and drought parched crops in Brazil. Growers in Vietnam held record stockpiles in the week ended March 7, according to a Bloomberg survey published March 17.
Dry weather
“Vietnam coffee areas are still in their normal dry season when very little rainfall occurs,” David Streit, a meteorologist at CWG in Bethesda, Maryland, said in an e-mail. “The trees actually use this dry period to go dormant, so the impact is negligible.”
While fruits have been formed in most regions, trees haven’t blossomed in others, said Huynh Quoc Thich, deputy head of the agriculture department in Dak Lak province, said by phone yesterday. Dak Lak, which is part of the Central Highlands, represents about 30 percent of the harvest.
“It’s dry every year during this time, so at this point, it’s not an issue and has not hurt coffee trees yet,” said Thich. “However, if sunny weather is prolonged, the situation may become problematic.”
Drought and “coffee flu” in the Central Highlands and frost in Son La province will cause production in 2014-2015 to decrease “significantly” from a year earlier, Vicofa said March 6, without giving specific output figures.
Rains across most of Dak Lak in the 11 days through March 31 may range from 10 millimeters to 30 millimeters, the Meteorology and Hydrology Department said in a report e-mailed today. No rainfall was recorded in the March 11-20 period.
Beans in Dak Lak fell 2 percent to 40,000 dong ($1.90) a kilogram yesterday, Trade & Tourism Center data show. That’s 35 percent higher than a three-year low of 29,600 dong in November.

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