Coffee farmers in Vietnam, the top supplier of robusta used by Nestlé, probably have the largest unsold inventories in at least five years as they hang onto supplies in anticipation of a recovery in prices.
Growers were hoarding 42 per cent of the crop by the end of April, the median of eight trader estimates compiled by Bloomberg showed. That’s the most since at least 2010 and compares with a five-year average of 27 per cent, according to traders. Production will reach 1.72 million metric tons in the year from next October, down about 4 per cent from a previous estimate because of dry weather, they said.
“Vietnamese farmers are benefiting from lower lending rates and years of savings, so they can hold back beans,” Le Duc Huy, deputy general director of the second-biggest exporter known as Simexco, said on 6 May. “Profits from other crops such as pepper are helping them.”
Farmers are trying to grow more pepper, avocados, durians, oranges and macadamia nuts to increase their income because coffee is less profitable than those crops, Tong Teik Pte, owned by RCMA Commodities Asia Pte, said in a report. Growers have boosted pepper plantings after prices in Vietnam more than tripled in the past five years.
Unsold coffee inventories were probably 660,000 tons at end-April from 420,000 tons a year earlier, the survey showed. Exports slumped 41 per cent in the four months through April to the lowest level since 2008, Statistics Office data show.
April was the driest on record for most growing areas. The rainy season probably won’t start officially until late May or early June and only then will dry conditions gradually improve, the National Center for Hydro-Meteorological Forecasting said 1 May.
Bloomberg News, edited by ESM
