Coffee Harvest in Vietnam May Climb on Favorable Weather, Increased Area

Coffee production in Vietnam, the largest robusta grower, may climb this year after favorable weather and expanded planting boosted the harvest, potentially easing a global shortage that’s driven prices to a two-year high.

The crop may total 1.2 million metric tons, or 20 million 60-kilogram bags, in the year from Oct. 1, according to the median from a Bloomberg News survey of 10 growers, analysts and traders. That compares with last year’s harvest of 1.05 million tons, according to the U.S. Department of Agriculture. Separately, officials in Vietnam’s three largest growing provinces -- Dak Lak, Lam Dong and Gia Lai -- all forecast gains.

The increased production of the beans used in espressos and instant drinks may help to curb the advance in robusta futures, trading at their highest since 2008. Indonesia, a rival robusta grower, may increase output as much 3 percent to 10 million bags this year, according to the International Coffee Organization.

“The crop looked positive, with some increase in production,” said Pham Dinh Khai, director of An Giang Coffee Co.’s branch in Buon Ma Thuot, the capital of Dak Lak. Khai, one of the survey participants, predicted that nationwide output would be “at least” 1.2 million tons.

Robusta Rally

Robusta has advanced 34 percent over the past year amid what Nestor Osorio, the outgoing executive director of the International Coffee Organization, said on Sept. 7 was a “very tight situation between supply and demand.” The most-active contract on NYSE Liffe in London touched $1,910 a ton on Oct. 21, the highest since Oct. 14, 2008, and ended at $1,826 last week.

Arabica reached $2.035 a pound on ICE Futures U.S. on Oct. 21, the highest price in 13 years. Output in Brazil, the biggest producer, may drop to the lowest level in four years in 2011 after a drought hurt flowering and plants enter the lower- yielding half of a two-year cycle, the National Coffee Council, a growers’ group, said Oct. 22.

“Favorable weather has helped buoy the crop,” said Bui Hung Manh, head of the business department at Tay Nguyen Coffee Investment, Import and Export Co, referring to adequate rains, which aid flowering and fruiting. “Some new coffee-planting areas have started producing beans from this crop as well.”

Forecasts in the Bloomberg survey, undertaken between Oct. 11 and Oct. 22, ranged from 17.7 million to 22 million bags, with two forecasting a fall and eight looking for a gain. The USDA forecast for last year’s crop was issued in a June report.

‘Reasonable Rainfall’

Coffee bushes in Vietnam usually flower and form fruits between January and March, according to growers. “Vietnam experienced reasonable rainfall during blossoming, which was followed by good fruit-setting and cherry development,” the USDA said in the June report. The harvest usually starts Oct. 1

“Thanks to good weather during flowering period, the trees have more cherries this year,” said Pham Van An, head of the Lam Dong agricultural department. An, who didn’t contribute to the survey, forecast output from Lam Dong, the second-largest growing province, may gain 10 percent to about 330,000 tons.

Van Phu Bo, head of the cultivation office at Gia Lai’s agricultural department, forecast an increase in local output of 4.3 percent to 146,000 tons. Nguyen Van Sinh, deputy director of the agricultural department in Dak Lak, forecast a 5.3 percent gain to 400,000 tons.

Coffee companies expect the government to provide low- interest loans this season to help them to stockpile beans, the Vietnam Coffee and Cocoa Association said on Oct. 11. The plan, similar to state support offered late during the last harvest, may enable them to hold 300,000 to 500,000 tons from 2010-2011 output, said Luong Van Tu, chairman of the group known as Vicofa.

--Nguyen Dieu Tu Uyen. Editors: Jake Lloyd-Smith, Richard Dobson

To contact the reporter on this story: Nguyen Dieu Tu Uyen in Hanoi at uyen1@bloomberg.net

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

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