Vietnam Coffee Exports Seen Falling To Six-Year Low By Intimex

Coffee exports from Vietnam, the biggest producer of robusta beans, may fall to the lowest in six years as farmers hold out for higher prices amid a forecast global supply shortage, according to the nation’s largest shipper.

Robusta coffee beans sit in a container inside a coffee store in Hanoi. Photo: Bloomberg/Brent Lewin
 

Shipments are forecast at 1.1 million to 1.2 million metric tons this year, Do Ha Nam, the chief executive officer of Intimex Group, said in an interview last week. That would be the lowest level since 2010, according to customs data.

Robusta futures, which slumped 20 percent in 2015, may rebound this year because of concerns over global supply, said Nam, who is also the vice chairman of Vietnam Coffee and Cocoa Association. Rabobank International and Olam International Ltd. are also anticipating gains in the coffee markets.

“Prices are still on a down trend so farmers are not intending to sell, especially as prices are approaching their cost of production,” Nam said. “A crisis of global shortage could happen in April and May as there will be little supply from Indonesia and Vietnam.”

Robusta, used by companies including Nestle SA, gained 3.4 percent to $1,413 a ton on ICE Futures Europe on Monday, trimming their decline for the year to 7.7 percent.
Vietnam differentials

Should prices remain at those levels, the premium for farmers in Vietnam will climb to $50 a ton or more, Nam said. The current domestic premium of about $30 hasn’t attracted farmers to sell stockpiled beans, he said in the interview from Ho Chi Minh City on February 26.

Total production in Vietnam in 2015-16 will not be more than last season’s 1.5 million tons because of impact from El Nino, Nam said. Production in the 2016-17 harvest will continue to be limited as low prices have reduced replanting. Growers are replacing old coffee trees with pepper or fruit crops. The total planted are is forecast to drop to 600,000 hectares this year from 650,000 hectares last year. Green bean exports will also drop due to more investment in instant coffee production, Nam added.

Intimex’s coffee exports in 2016 are forecast to rise to 400,000 tons from 350,000 tons last year as the company markets higher-quality products, he said.

Coffee prices are set to increase as certified stockpiles are drawing down at an alarming rate, Olam CEO Sunny Verghese said Monday. Robusta futures may gain as much as $200 a ton in coming months as exports from Brazil and Indonesia are set to fall after dry weather curbed yields and farmers in Vietnam may decide to continue withholding beans, Carlos Mera Arzeno, an analyst at Rabobank, said earlier this month.

Khoa Le

Source: ThanhnienNews.com