Vietnam’s Main Coffee Area Seen Receiving Rain in Next 11 Days

The main coffee growing region in Vietnam, the top producer of robusta variety used by Nestle SA (NESN) in instant drinks, may get more rain in the final days of March, potentially helping the crop.

Parts of Dak Lak province, which represents about a third of the country’s harvest, will receive between 10 millimeters and 20 millimeters in the period to March 31, the Dak Lak Meteorology and Hydrology Department said today. Water levels in rivers and streams will be lower than the average in previous years, the department said in a report. The government said on Feb. 26 that the drought would hurt the crop.

The harvest starting in October may decline to an eight- year low, according to a Bloomberg survey this month, cutting supplies from Asia where exports from Indonesia, the third- largest shipper, are also falling because of higher domestic consumption. Buyers of the Vietnamese variety are paying a larger premium, according to Volcafe Ltd.

“There has been rain but the amount is not huge, so the drought conditions haven’t improved much yet,” said Cao Van Tu, chairman of Dak Lak-based Ea Pok Coffee Co. Trees usually flower from January and most would have formed fruit by now, according to growers.

The harvest may plunge as much as 30 percent to 1 million tons in 2013-2014, according to the survey published March 15. The decline will be at least 10 percent, the survey showed.

Beans in Vietnam are at a premium of $50 a ton to the price on the NYSE Liffe exchange in London, the highest level since the 2012-2013 season began on Oct. 1, Volcafe, a unit of commodities trader ED&F Man Holdings Ltd., said March 15. Beans in Dak Lak traded at 44,000 dong ($2.10) a kilogram yesterday, up 15 percent this year.

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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