Coffee Growers in Vietnam Say Rain Helps Crop Before Harvest

Coffee fruit in Vietnam are fully grown and of similar size to recent years after rains boosted crop development, according to producers in the biggest supplier of robusta beans used by Nestle SA. Futures fell.

Farmers have applied two rounds of fertilizer and are preparing for a final round in two to three weeks before harvesting starts in October, they said. Production may drop 3 percent to 1.65 million metric tons in 2014-2015 from a record a year earlier, according to a Bloomberg survey this month.

The start of the harvest may pressure futures in London which have climbed 16 percent this year on speculation that consumption will outstrip supply. The robusta shortfall will be 1.6 million bags, or 96,000 tons, in 2014-2015, according to Volcafe Ltd. Total coffee demand will exceed output by as much as 10 million bags, the International Coffee Organization said this month, based on research by others.

“Cherries have basically reached their full size after heavy rains,” said Vu Dinh Noi, head of a production team at state-owned Thang Loi Coffee Co., the biggest grower. “The key now is applying fertilizer and preventing disease.” A mix of rainy and sunny days would help, he said by phone on Aug. 13.

Futures lost as much as 0.8 percent to $1,946 a ton on NYSE Liffe today before trading at $1,955. Prices advanced 4.4 percent in July, rising for a second straight month, after an 11 percent slump in May. Arabica, the variety favored by Starbucks Corp., jumped 72 percent to $1.9120 a pound this year.

‘Heavy Showers’

“The cherry size is now similar to the average over the past five years,” said Cao Van Tu, chairman of Dak Lak-based Ea Pok Coffee Co. “While heavy showers did cause cherries to fall off on our plantation, our agronomists addressed the issue so the amount affected was not that much,” he said by phone.

The last record crop probably stressed trees and may reduce yields, and heavy rains last month spurred diseases in some regions and resulted in loss of cherries, Phan Hung Anh, deputy director of Dak Lak-based Anh Minh Co., the largest private exporter by volume, said by phone this month.

Rainfall recorded in Dak Lak averaged 400.4 millimeters in July at 10 stations, including one in neighboring Dak Nong province, said the Meteorology and Hydrology Department in the province, which represents about 30 percent of the harvest. That’s more than double 192.5 millimeters a year earlier.

Precipitation in the province averaged 86.7 millimeters in the first 10 days of August, less than 100.9 millimeters a year ago. Rainfall for Aug. 11 to Aug. 20 is forecast to be similar or lower than the average in previous years, with most regions receiving 30 to 50 millimeters, the weather office said Aug. 12.

“The intensity and frequency of rains has subsided in the last one week,” Tong Teik Pte, a company owned by RCMA Commodities Asia Pte, wrote in an Aug. 13 report. “Good sunshine and overcast skies present favorable weather for the development of cherries.”

Before it's here, it's on the Bloomberg Terminal.