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Coffee Sales by Vietnam Growers Seen at Lowest in Four Years

Published on Apr 8 2015 10:35 AM in Supply Chain tagged: Vietnam / Coffee

Coffee Sales by Vietnam Growers Seen at Lowest in Four Years

Coffee farmers in Vietnam, the top supplier of robusta beans used by Nestlé SA, have probably sold the smallest proportion of the crop in at least four years, cutting shipments in the first quarter to the lowest since 2010.

Growers had sold 50 per cent of the harvest by the end of March from 62 per cent a year earlier, the median of 10 trader estimates compiled by Bloomberg shows. That’s the lowest in Bloomberg surveys that started in 2012. Output in the season that began 1 October is now estimated at 1.52 million metric tons from a record 1.72 million tons in 2013-2014, the median shows.

Futures lost 17 per cent in London in the past 12 months as crop prospects improved in Brazil, the second-biggest producer of Robusta and the top grower of Arabica beans favoured by Starbucks Corp. Indonesia, the third-largest Robusta supplier, will harvest a record crop in the season that began this month after rains boosted yields, according to a Bloomberg survey.

“Prices are still low so farmers are not selling,” Van Thanh Huy, general director of Daklak Investment Export-Import, said on 6 April. “They require at least 40,000 dong a kilogram,” he said, referring to local rates.

Exports from Vietnam dropped 41 per cent to 354,000 tons in the first quarter from a year earlier, the least since 2010, according to General Statistics Office data.

“It raises supply questions for coming months,” said Sunwah Commodities in Hong Kong, referring to the drop in shipments. “Some adaptations might become necessary for the end-buyers that might reduce the proportion of Vietnam Robusta in their blends,” the company said by e-mail on 30 March.

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Some shippers are offering a premium of $60 a ton over London futures for Vietnam beans, which typically trade at a discount, Van Thanh Huy said. About half the crop is held upcountry “in strong hands,” according to Tong Teik Pte, a company owned by RCMA Commodities Asia Pte.

Vietnam’s production this season would be 5 per cent below the 1.6 million-ton estimate in a Bloomberg survey published March 6. Growers sold 760,000 tons by end-March, compared with 1.07 million tons a year earlier.

Bloomberg News, edited by ESM

 

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