Vietnam's coffee output seen at four-year low

Bloomberg

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Coffee output in Vietnam, the world’s biggest producer of robusta beans, is forecast to drop to the lowest in four years next season amid the worst drought in three decades.
Growers will collect 1.5 million metric tons in the harvest starting this October, according to a Bloomberg News survey of eight traders. That would be the lowest since the 2012-13 crop year. This season’s output will be 1.65 million tons, according to the survey.
Global supply is shrinking as El Nino weather conditions cause crop losses in Southeast Asia and South America. Robusta, used mainly in instant coffee, rose 5.8 percent in April, a third monthly advance, the longest run in two years.
“A lot of coffee plants in my area withered, causing fruit to fall off,” said Mai Ky Van, deputy director at October Coffee-Cocoa One Member Ltd., a state-owned plantation company. His group only has enough water for two rounds of irrigation, while the trees need four, he said.
Robusta jumped 2 percent to close at $1,649 on ICE Futures Europe on May 6, the highest since Nov. 5. Prices are up 7.8 percent this year.
Conditions aren’t improving, with May rainfall in the south and the Central Highlands, the main producing area, forecast to be 20 to 40 percent lower than average, according to a May 1 statement by Vietnam’s National Center for Hydro-Meteorological Forecasting. Average temperatures are likely to be 1 to 1.5 degree Celsius higher than normal, it said. Rains will be scattered so drought and water shortage conditions won’t improve much, according to the statement.
Rainfall at 10 stations in Dak Lak including one in Dak Nong province averaged 25.8 millimeters in April, or about a third of the normal amount of previous years of 77.4 millimeters, data from the Meteorology and Hydrology Department show. The province accounts for 30 percent of the harvest.
Waves of price gains in April boosted local sales, traders said. Growers sold 1.1 million tons, or 67 percent of the current crop, at the end of April, according to the survey. That compares with 56 percent a year earlier and a five-year average of 70 percent.
Vietnam shipped 638,000 tons of coffee in the first four months this year, an increase of 35 percent from last year, according to the General Statistics Office.

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