Bloomberg News

Coffee Crop in Vietnam Dropping From Record on Fewer Fruit

August 06, 2012

Coffee production in Vietnam, the world’s biggest grower of robusta, may drop 10 percent in 2012-2013 after old branches were pruned following a record harvest, resulting in fewer fruit, according to a Bloomberg survey of traders, growers and shippers.

Output may drop to 1.3 million metric tons next year compared with this season’s 1.45 million tons, according to the median estimates in the survey. A total of 10 respondents gave forecasts for this year, while seven offered figures for next year. Vietnam’s 2012-2013 season starts in October.

The outlook for a smaller crop may reinforce speculation that supplies of the bitter-tasting beans, used in instant drinks, may be limited next year as demand gains. Global robusta output will exceed demand by only 500,000 bags of 60 kilograms each next season, according to CoffeeNetwork, a unit of INTL FCStone Inc. Demand this season has risen 5.5 million bags, London-based fund Holland Capital LLP said in July.

“After such a good coffee harvest branches become weaker, so they had to cut old branches for new ones to come out,” said Le Tien Hung, Dak Lak-based deputy general director of Sept. 2nd Import-Export Co. “New branches won’t be strong enough to bear many fruit, so output will probably fall.”

Robusta for September delivery ended at $2,224 a ton on Aug. 3 on NYSE Liffe. Most-active prices have rallied 23 percent this year as roasters boosted the share of the variety in blends, cutting the amount of costlier arabica, and as emerging- market demand rose. Arabica prices fell 23 percent.

‘Stronger Demand’

There’s “stronger demand for cheaper coffee,” the International Coffee Organization said in a monthly report on Aug. 2, citing record robusta shipments and higher prices. Exports climbed 11 percent to 31.7 million bags from the start of the season in October through to June, ICO data showed.

The 2012-2013 harvest in Vietnam may be 5 percent to 7 percent smaller than the 2011-2012 crop, Amsterdam-based Nedcoffee BV said in a report last month. The 2012-2013 crop may decline 15 percent as flowers that blossomed early dropped off trees, leaving no beans, Luong Van Tu, chairman of the Vietnam Coffee & Cocoa Association, said in June.

The survey’s findings differ from projections from the U.S. Department of Agriculture, which puts this year’s total harvest at 21 million bags (1.26 million tons) and 2012-2013’s at 22.4 million bags.

Output in Vietnam may drop 16 percent to 1.08 million tons by 2015 as the government replaces aging trees with new ones, and as the growing area is cut to make room for other crops, the Ministry of Agriculture and Rural Development said July 26. Robusta is harvested mainly in Asia and parts of Africa, while arabica is grown in Latin America and is favored for specialty drinks such as those made by Starbucks Corp. (SBUX:US)

To contact Bloomberg News staff for this story: Diep Ngoc Pham in Hanoi at dpham5@bloomberg.net

To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net


Monsanto vs. GMO Haters
LIMITED-TIME OFFER SUBSCRIBE NOW

(enter your email)
(enter up to 5 email addresses, separated by commas)

Max 250 characters

Companies Mentioned

  • SBUX
    (Starbucks Corp)
    • $78.87 USD
    • -0.58
    • -0.73%
Market data is delayed at least 15 minutes.
 
blog comments powered by Disqus