Coffee Harvest In Vietnam Set To Drop From Record On Yields

Rabu, 11 Juni 2014 | 08:58

Coffee output in Vietnam, the top grower of robusta beans used by Nestle SA and Mondelez International Inc., will probably decline in the year starting October as yields shrink after a record crop.The harvest may contract by 4 percent to 1.64 million metric tons from 1.71 million tons a year earlier, according to the median of 12 trader and analyst estimates compiled by Bloomberg. Unsold inventories with farmers were equivalent to 19 percent of production by the end of May, from 20 percent at the same time last year, the survey showed.

Futures for robusta climbed 12 percent in 2014 on speculation that demand will outstrip supplies in the year from October, with the shortfall estimated at 1.6 million bags, or 96,000 tons, by Volcafe Ltd. A looming El Nino weather event, which parches some parts of Asia, may also support prices, says Rabobank International. A bag weighs 60 kilograms (132 pounds).

“The weather this year does seem a bit harsher with rains arriving later than usual,” said Pham Viet Dai, a 59-year-old farmer in Dak Lak province, who has planted coffee for two decades. “At this point, the fruits look nice and are of similar size to the previous year,” said Dai, who estimates collection on his plantation may drop as much as 6 percent.

Robusta ended at $1,883 a ton on NYSE Liffe yesterday. Arabica, the variety favored for specialty drinks such as those made by Starbucks Corp., was at $1.6535 a pound on ICE Futures U.S. in New York, rebounding 49 percent in 2014 to become the best performer after lean hogs in the Standard & Poor’s GSCI Spot Index of 24 commodities.

Plants in Vietnam are “exhausted after two big crops” and new plantations won’t make up for the weak and old ones, Alexander Gruber, trading manager at Tong Teik Pte, a company owned by RCMA Commodities Asia Pte, said by e-mail.

The global market, including arabica and robusta, will have a shortage of 11.3 million bags in 2014-2015, the most in more than a decade, from a surplus of 4.7 million bags this year, Volcafe, a unit of trader ED&F Man Holdings Ltd., said June 3.

by Bloomberg