Bloomberg News

Vietnam Coffee Farmers Curb Pre-Tet Sales on Harvest Drop

February 01, 2013

Coffee growers in Vietnam, the biggest producer of the robusta beans used by Nestle SA (NESN) in instant drinks, are limiting sales before the Tet Lunar New Year festival to seek higher prices for a smaller crop.

Sales probably reached 570,000 metric tons, or 40 percent of the harvest, less than the 45 percent sold a year earlier, according to the median of eight trader and shipper estimates compiled by Bloomberg. Production may have dropped 15 percent to 1.41 million tons from a record 1.65 million tons last season, the survey shows.

Robusta has tumbled 7.9 percent since the end of September when harvesting began in Vietnam after climbing 21 percent in the first nine months as roasters switched from the more expensive arabica variety. World coffee output will be 144.1 million 60-kilogram bags in 2012-2013, up 7.2 percent from a year earlier, the International Coffee Organization said Jan. 9. Robusta consumption will rise 6 percent to 66.6 million bags as arabica advances 1 percent to 78.6 million, according to Volcafe.

“Farmers are holding back in anticipation that prices will rise after Tet, especially with a smaller harvest,” said Mai Ky Van, deputy director at October Coffee-Cocoa One Member Ltd. “They had a good crop last year so they have the financial resources to do so.”

Beans in Dak Lak, the main growing region in Vietnam, were 39,300 dong ($1.89) a kilogram (2.2 pounds) yesterday, down 9.9 percent from last year’s high of 43,600 dong a kilogram in July, data from the Daklak Trade & Tourism Center show.

Dry Weather

The harvest finished in mid-to-end December, two to three weeks earlier than the previous crop because of dry weather, traders said. The week-long Tet holiday will start Feb. 9.

Exports from Indonesia’s southern Sumatra, the main growing region in the world’s third-largest robusta producer, may be little changed this year amid threats to the crop from stormy weather, the Association of Indonesian Coffee Exporters and Industry said Jan. 30. Shipments from Lampung, Bengkulu and South Sumatra gained 24 percent to 243,807 tons last year, said Mochtar Luthfie, head of research and development at the association’s Lampung chapter.

Robusta for delivery in March advanced 0.7 percent to $2,023 a ton on NYSE Liffe in London at 5:01 p.m. Singapore time today. Arabica for March rose 0.3 percent to $1.474 a pound on ICE Futures U.S. in New York. Robusta’s discount to arabica has shrunk to 55.90 cents a pound from 145 cents at the end of 2011.

Robusta is harvested mainly in Asia and parts of Africa, while arabica is grown in Latin America and favored for specialty beverages 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


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