Bloomberg News

Vietnam Coffee Harvest Runs Ahead of Last Year on Dry Spell

November 08, 2012

Coffee farmers in Vietnam, the world’s biggest grower of the robusta variety used by Nestle SA (NESN) in instant drinks, have harvested more beans than last year because of an early start and favorable weather.

Growers reaped about 19 percent of the crop, or 280,000 metric tons, the median of eight trader and shipper estimates compiled by Bloomberg shows. The harvest is set to drop 12 percent to 1.45 million tons from 1.64 million tons last season, while 175,000 tons have been sold, the survey shows.

Robusta traded in London has declined 12 percent since the end of September, dropping to the lowest price in nine months, as harvesting in Vietnam accelerated. Global production of the variety and the milder-tasting arabica is poised to increase 9.3 percent in the 2012-2013 year, pushing the world market into a surplus, according to the International Coffee Organization. While robusta is still 6.6 percent higher this year, arabica futures have slumped 33 percent.

“The weather has been dry and sunny, which is very beneficial for harvesting as well as for ripening of beans,” said Le Tien Hung, Dak Lak-based deputy director of Sept. 2nd Import-Export Co. Farmers collected more beans compared with the same time last year also because the harvest started two weeks early, traders said.

Dak Lak, the main growing region in Vietnam, may get less- than-average rainfall and humidity in the first 10 days of this month, helping the harvest, the Meteorology and Hydrology department said on Nov. 1. Farmers haven’t sold much from this crop because prices at the start of the harvest are a “little bit low,” Hung said.

Production Climbs

The global harvest will rise to 147 million bags in the season that started on Oct. 1 in most countries from 134.5 million bags a year earlier, the International Coffee Organization said in its monthly report. Consumption will gain from 139 million bags in calendar year 2011, it said. A bag of coffee usually weighs 60 kilograms (132 pounds).

Robusta is harvested mainly in Asia and parts of Africa, while arabica is grown in Latin America. Robusta for delivery in January was little changed at $1,930 a ton today on NYSE Liffe, while arabica for December rose 0.4 percent to $1.5185 a pound on ICE Futures U.S. in New York. Robusta’s discount to arabica has shrunk to 64.31 cents from 145 cents at end-2011.

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


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