Vietnam coffee sales climb as prices gain, drought may ease

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Coffee sales in Vietnam, the biggest grower of robusta beans used by Nestle SA in instant drinks, advanced as local prices surged last month and on speculation that rain will ease a drought in the main growing region.

Sales probably reached 1 million metric tons, or 69 percent of the 2012-2013 crop, compared with 70 percent sold a year earlier, according to the median of 11 trader and shipper estimates compiled by Bloomberg. Farmers had sold 57 percent of the harvest, a survey on March 7 showed.

Rising sales in Vietnam may pressure robusta futures traded in London, already down 7.2 percent from a five-month high in March. Rains forecast for Dak Lak, which grows about 30 percent of the crop, could potentially ease a drought that threatens to cut supplies at a time when exports from Indonesia, the third- largest shipper, are falling because of higher domestic demand. Vietnam's harvest starting October will drop at least 10 percent because of the dryness, a survey published March 15 showed.

"This time last year, I still had about half of my crop," said Dang Huu Hung, a farmer in Dak Lak province. "Now I've sold all my coffee from the 2012-2013 crop because prices got quite high and also because I need to pay for irrigation and fertilizer costs."

Beans traded in Dak Lak gained 1.4 percent to 42,600 dong ($2.03) a kilogram (2.2 pounds) yesterday, extending their annual gain to 11 percent, data from the Daklak Trade & Tourism Center show. Prices reached 45,500 dong on March 11, the highest level since September 2011. The 2012-2013 harvest may have dropped 13 percent to 1.44 million tons from a record 1.65 million tons a year earlier, the latest survey shows.

Crop prospects

Areas in the province will receive 15 millimeters to 25 millimeters through April 10, according to the Meteorology and Hydrology Department. Water levels in rivers and streams will be lower than average in previous years, it said in a report. The government said Feb. 26 that drought would hurt the crop.

"There has been some rain, but quite little in amount," said Le Tien Hung, Dak Lak-based deputy director of Sept. 2nd Import-Export Co. "We can't rule out the drought threat yet.

Robusta for delivery in July fell 0.7 percent to $2,042 a ton on NYSE Liffe in London today. Prices rose to an intraday high of $2,216 a ton on March 13, the highest since Oct. 3. Robusta will trade from $1,900 to $2,100 a ton this month as crop prospects improve in Vietnam, Edward Meir, an analyst at INTL FCStone Inc., said April 2.

Arabica for May delivery fell 0.4 percent to $1.3895 a pound on ICE Futures U.S. in New York. Robusta's discount to the more expensive arabica beans, brewed by Starbucks Corp., was about 46.28 cents a pound, down 18 percent this year after a 61 percent plunge in 2012.

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