Monthly coffee inventories in Vietnam, the largest robusta producer, are more than three times higher than last year as growers continued hoarding amid slumping futures prices.
Farmers in the Southeast Asian country were holding onto 320,000 metric tons, or 20 percent of the harvest, at the end of August, according to the median estimate of eight traders surveyed by Bloomberg. That compares with 90,000 tons, or 5 percent of the crop, a year ago.
A large amount of carry-over stocks will add to pressure on prices as the harvest starting next month is forecast to match the 2013-2014 record. Robusta futures have slumped 17 percent this year, a move that’s only been partially offset by three devaluations of Vietnam’s dong.
“The dong devaluation wasn’t big enough to offset the slump in futures, so prices offered to local farmers are still low and can’t spur sales,” said Phan Hung Anh, deputy director of Dak Lak-based coffee trader Anh Minh Co. “Growers also have income from other crops like pepper or durian so they’re not interested in selling coffee.”
The hoarding, which has been at five-year highs since March, has slashed exports. Shipments from Vietnam slumped about 30 percent in the first eight months of the year to 876,000 tons, the lowest since 2010, according to the Statistics Office.
Coffee prices are likely to remain under pressure because producers in Brazil and Indonesia are strongly pushing exports after their currencies collapsed, Anh said. The dong has fallen less than 3 percent since the end of June, compared with a 19 percent slump in Brazil’s real and about a 7 percent slide in Indonesia’s rupiah.
Robusta on ICE Futures Europe closed at $1,581 a ton on Monday, after dropping as low as $1,579. In Vietnam, beans traded at 35,800 dong ($1.59) a kilogram on Monday after climbing to a two-month high of 39,000 dong on June 25, according to data from the Trade & Tourism Center in Dak Lak.
The coming harvest is forecast to total 1.72 million tons, higher than the previous crop of 1.6 million tons, the survey shows. While precipitation in Dak Lak last month was 22 percent lower than the amount a year earlier, it’s only 3 percent below average, government data show.