- Farmers tend to harvest in bulk to save costs, Simexco says
- Lower quality reflected in smaller beans, one-seed cherries
Coffee farmers in Vietnam, the top producer of robusta beans used by Nestle SA, are harvesting more slowly than usual because of low prices.
About 32 percent of the 2015-16 crop was collected in October and November, according to the median of eight estimates from traders surveyed by Bloomberg. That compares with 41 percent a year ago and a five-year average of about 38 percent, the survey showed. Output is forecast at 1.65 million metric tons, 3.1 percent higher than the 1.6 million tons in the last crop year.
Robusta futures, which slumped to a two-year low last week, are forecast to remain weak in 2016 as crops increase in both Vietnam and Indonesia, according to a report by BMI Research. Vietnam’s carry-over stocks will also weigh on prices, with growers’ unsold inventories at the end of September nearly four times greater than a year ago.
“Because prices are so low, farmers tend to wait and harvest in bulk in order to save costs,” according to Le Tien Hung, general director of Sept. 2nd Import-Export Co., an exporter known as Simexco.
Robusta on ICE Futures Europe fell 0.1 percent to $1,535 a ton on Monday. Futures have lost 20 percent since the start of 2015. In Vietnam, beans last closed at 34,500 dong ($1.53) a kilogram, down 12 percent this year, according to data from the Trade & Tourism Center in Dak Lak.
Farmers held 275,000 tons at the end of September, or 17 percent of the last harvest, according to a Bloomberg survey in October. That compares with 70,000 tons, or 4 percent, a year earlier. Exports declined 27 percent in the first 11 months of the year to about 1.16 million tons, the lowest since 2010, according to the country’s statistics office.
Dry weather reduced the quality of this season’s crop, according to Hung. Beans are smaller than usual and more cherries contain only one seed instead of two, he said.
Precipitation from April to October in Dak Lak, which accounts for about 30 percent of the harvest, was 26 percent lower than a year earlier and 13 percent less than the average of previous years, according to the Meteorology and Hydrology Department.
The Vietnamese crop will grow “modestly” in 2015-16 “due to stagnation in area cultivated and the El Nino-related dry weather recorded in most of 2015, Aurelia Britsch, senior commodities analyst at BMI Research wrote in the report dated Dec. 2. Production is forecast to grow 1.4 percent to 1.7 million tons, according to the report.