Coffee farmers in Vietnam seen reaping record crop

Bloomberg

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A worker harvests coffee on a farm in the main coffee-growing area of Dak Lak province in central Vietnam. The harvest in Vietnam almost doubled in the past decade while Indonesian production rose about 30 percent, according to the U.S. Department of Agri A worker harvests coffee on a farm in the main coffee-growing area of Dak Lak province in central Vietnam. The harvest in Vietnam almost doubled in the past decade while Indonesian production rose about 30 percent, according to the U.S. Department of Agri

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Coffee farmers in Vietnam, the top grower of robusta beans used by Nestle SA, will probably gather a record crop next season as yields recover.
Output in the year starting October may jump 13 percent to 1.8 million metric tons assuming normal weather, according to the median of nine trader and analyst estimates compiled by Bloomberg. Output fell to 1.6 million tons this year from 1.72 million tons in 2013-2014, the most ever, the survey shows.
Futures lost 10 percent in the past 12 months, slumping to a one-year low in London on Wednesday, as crop prospects improved in Brazil. The South American nation is the second-biggest producer of robusta and the top grower of arabica beans favored by Starbucks Corp. The global coffee harvest will rise 7 percent in 2015-2016 after a deficit this year that’s forecast to be the biggest in nine years, Volcafe Ltd. estimates.
“My yield will increase from 3 tons per hectare to 4 tons in the next season,” said Pham At, a 60-year-old farmer in Dak Lak province, which accounts for about 30 percent of output. “The off-year will be followed by an on-year. It’s the nature of the coffee tree.”
Futures settled at $1,875 a ton on ICE Futures Europe on March 5, a day after plunging to $1,833, the lowest level since February 2014. Arabica closed at $1.3505 a pound in New York, with its premium over robusta at about 50 cents a pound.
Good flowering
Weather from now until October is as usual crucial and any serious estimate can only be given by July once the rains have started and beans are developing, Tong Teik Pte, a company owned by RCMA Commodities Asia Pte, said in a report e-mailed March 4.
Good flowering and setting are spurring farmer hopes for an increase in the crop after a “disappointing outturn” this year, Tong Teik said. The company estimates the 2014-2015 crop at 25.1 million 60-kilogram bags or 1.51 million tons.
Dak Lak province is forecast to have mostly dry weather in the 10 days through March 10, with most regions receiving less than 5 millimeters of rain, the Meteorology and Hydrology Department said in an e-mail March 1. Average water levels in rivers and streams in the last eight days of February were similar to a year earlier and as much as 0.3 meter lower than the average in previous years, it said.
While supplies are predicted to increase next season, farmers are holding back sales in anticipation of higher prices, according to the survey. Growers sold 650,000 tons by end-February, or 41 percent of the 2014-2015 crop. That compares with 780,000 tons, or 45 percent a year earlier, and a five-year average of 50 percent, it shows.
Sales cut
“Everyone from farmers to local buying agents seems to be hoarding,” said Le Tien Hung, general director of Sept. 2nd Import-Export Co., Vietnam’s second-largest exporter by volume. “It’s very tough for us to buy.”
Shipments may reach 241,000 tons in the first two months of the year, 25 percent less than the same period in 2014, the General Statistics Office estimates. Beans in Dak Lak fell to 38,900 dong ($1.82) a kilogram March 5 from a three-month high of 41,400 dong on Feb. 24, Trade & Tourism Center data show.
Vietnam will probably produce 30.6 million bags in 2015-2016, Keith Flury, head of coffee research at Winterthur, Switzerland-based Volcafe, wrote in a report last month. Output will also rise in Brazil and Indonesia, the third-largest robusta grower, he said.
Bigger crops will boost global coffee production to 152.8 million bags and help cut the world deficit to 1.4 million bags in 2015-2016 from 8.9 million bags this year, the biggest since 2005-2006, said Volcafe, a unit of ED&F Man Holdings Ltd., a commodities trader.

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