The coffee harvest in Vietnam, the top producer of robusta beans used by Nestle SA, is progressing at a slower-than-normal pace as low prices and high inventories from the previous crop discourage farmers from picking new fruit.
Growers reaped about 2.5 percent of the 2015-16 crop in October, when harvesting began, according to the median of eight estimates from traders surveyed by Bloomberg. That compares with 4 percent a year ago and the typical level of about 5 percent, the survey showed. Output is forecast at 1.65 million metric tons, according to a survey last month.
Robusta futures slumped about 21 percent from this year’s peak in February, prompting Vietnamese farmers to hold supplies in anticipation of higher prices. Unsold inventories held by growers at the end of September were nearly four times the stockpiles a year earlier. The hoarding, which has been at five-year highs since March, has curbed exports.
“Prices are not good so farmers are not interested in picking beans from the new crop,” said Tran Tuyen Huan, general director of trader Asia Commodities Joint-Stock Co. in Ho Chi Minh City. “There’s also a lot of coffee left from the previous season.”
Farmers held 275,000 tons at the end of September, or 17 percent of the harvest, according to the survey last month. That compares with 70,000 tons, or 4 percent of the crop, a year earlier. Exports from Vietnam declined 29 percent in the first 10 months of the year to about 1.06 million tons, the lowest since 2011, according to the country’s statistics office.
Robusta on ICE Futures Europe rose 1.3 percent to $1,625 a ton on Monday. In Vietnam, beans traded at 35,400 dong ($1.58) a kilogram, down 9.2 percent this year, according to data from the Trade & Tourism Center in Dak Lak.
Precipitation from April to October in Dak Lak, which accounts for about 30 percent of the harvest, was 26 percent lower than a year earlier and 13 percent less than the average of previous years, according to the Meteorology and Hydrology Department. Rainfall in November in Central Highlands and the southern part of Vietnam may be 20 percent to 40 percent less than normal, the National Center for Hydro-Meteorological Forecasting said on Nov 1.
Dry weather has already reduced bean size this season. Output was revised down to 1.65 million tons in the survey last month from 1.72 million tons previously. Lower rainfall this year means less ground water, and that will have more impact on the next growing cycle, Huan said.