Coffee harvesting in Vietnam is set to peak about two weeks later than last year after lack of rain in October delayed cherry growth, potentially slowing sales from the biggest producer of robusta beans used by Nestle SA.
The season, which started last month, will peak in late November or early December, according to the median of 12 trader estimates compiled by Bloomberg. Farmers had picked 4 percent of the crop by the end of October compared with 10 percent a year earlier, the survey shows.
Futures jumped 20 percent in London this year on expectations that consumption will exceed supply as drought hurts trees in Brazil, the top producer of the more expensive arabica beans and the second-biggest grower of robusta.
Global shortages may persist for the next two years, the International Coffee Organization says. Stockpiles with Vietnamese growers were at a record low in October, according to Nedcoffee BV.
“There has been less rain at the end of the wet season so the development of cherries is slower,” said Le Tien Hung, general director of Sept. 2nd Import-Export Co., Vietnam’s second-largest exporter by volume. “Farmers are waiting for fruits to ripen so harvesting progress is trailing last year,” he said by phone on Nov. 4.
Robusta futures rose 0.6 percent to $2,019 a ton on ICE Futures Europe on Nov. 7. Arabica, favored by Starbucks Corp., climbed 69 percent this year to $1.8675 a pound.
Rainfall recorded in Dak Lak averaged 102 millimeters in October at 10 stations, including one in neighboring Dak Nong province, compared with 147.7 millimeters in the same period last year, and an average of 234.8 millimeters in previous years, according to the Meteorology and Hydrology Department. Dak Lak supplies about 30 percent of the harvest.
Farmers held less than 40,000 tons of beans on Oct. 1, an “historic low” after high prices encouraged sales, Nedcoffee, an Amsterdam-based trader, said in a report e-mailed Oct. 21.
While the harvest delay may cut supply for now, production in 2014-2015 will match the previous year’s record of 1.71 million tons, the median of estimates in the survey shows. That’s more than the 1.69 million tons predicted last month as some traders raised forecasts, citing favorable weather during most of the season which reduced threats from pests and disease.
Growers have picked about 5 percent of cherries, Tong Teik, a company owned by RCMA Commodities Asia, said in a report e- mailed Nov. 5. There’s no selling pressure as people wait for the crop to “become available in good flow” and that will happen only in December, the report said.
Trading in the domestic market has come to a virtual halt because prices demanded by local farmers are much higher than what exporters are prepared to offer, said Phan Hung Anh, deputy director of Dak Lak-based Anh Minh Co., the largest private exporter by volume. Beans in the local market were quoted at a discount of $60 to futures in London compared with a $90 to $100 discount sought by foreign buyers, he said Nov. 4.
While supply from Vietnam may be limited, reserves elsewhere increased. Robusta stockpiles with a valid grading certificate in warehouses monitored by ICE Futures Europe rose to 120,420 tons on Oct. 27 from 119,950 tons two weeks earlier.
Stockpiles at consumer ports grew the most in three years in the season that ended in September, Volcafe Ltd. said last month. Strong prices since February spurred producer selling, resulting in a 2 million-bag increase in inventories compared with the previous year. Sales slowed more recently as prices fell, it said. A bag weighs 60 kilograms or 132 pounds.
The global shortfall in robusta beans will be 1.9 million bags in the 12 months started in October, Volcafe estimates. The world market, including arabica and robusta, will have a shortage of 8.8 million bags, the most in nine years, from a surplus of 7 million bags a year earlier, the Winterthur, Switzerland-based unit of commodities trader ED&F Man Holdings Ltd. said in a report e-mailed Sept. 5.
Coffee shortages are expected through 2015-2016, Mauricio Galindo, head of operations at the ICO in London, said Sept. 26.