Coffee growers in Vietnam are storing the most beans in at least five years as they bet the biggest surge in prices in 16 months has further to run.
Farmers held 28 percent of the crop in the world’s largest robusta producer at the end of last month, according to the median of eight trader estimates compiled by Bloomberg. Unsold inventories totaled 440,000 metric tons, the survey showed. That compares with 250,000 tons, or 15 percent of the crop, held at this time in the previous season.
Futures in London last month rose the most since February 2014 while beans in Vietnam’s main growing region of Dak Lak jumped to the highest in two months. While that’s encouraging farmers to hold supplies in anticipation of higher prices, surging stockpiles may drive prices lower when the next harvest starts in October, according to Anh Minh Co., the country’s largest private exporter by volume.
“I want to wait for good prices,” said Tran Thanh Nga, a 32-year-old farmer who hasn’t sold any beans from her four-ton stockpile. “Prices rose in late June but they were not high enough for me.
Robusta on ICE Futures Europe settled at $1,738 a ton on Monday after prices surged 9.3 percent in June. In Vietnam, beans traded at 36,800 dong ($1.69) a kilogram on Monday after climbing to 39,000 dong on June 25, the highest since April 24, according to data from the Trade & Tourism Center in Dak Lak.
Local prices need to be at least 40,000 dong to encourage selling, according to Nga. Shipments from Vietnam slumped 36 percent in the first half of this year to 690,000 tons, the lowest since 2010, according to the Statistics Office.
‘‘The gains in prices induced some sales,’’ said Phan Hung Anh, deputy director of the Dak Lak-based Anh Minh Co. ‘‘The amount was limited, and farmers’ stocks are still very high,’’ he said by phone July 6.
After a drier-than-usual month of May the weather has started to improve, boosting prospects for the next crop. The harvest starting October will total 1.72 million tons, compared with the previous crop of 1.56 million tons, as rainfall returns to normal levels in spite of a strengthening El Nino. That would match the record output in 2013-2014.
While precipitation in Dak Lak in June was 17 percent below last year, it’s 4 percent above average, government data show.
Rainfall and temperatures in July in the Central Highlands are forecast to be close to average in previous years, the National Center for Hydro-Meteorological Forecasting said July 1 on its website. Water is crucial for helping trees absorb fertilizer as fruit develop.
"Hoarding coffee is like a double-edged sword," said Anh. "On the one hand, prices may get better. On the other hand, buyers may switch to supplies elsewhere and once they’ve done that it may be hard for them to switch back to Vietnam."