The coffee harvest in Vietnam, the top producer of Robusta beans used by Nestlé SA, may be smaller than previously forecast as dry weather reduces bean size and low prices discourage farmers from replanting.
Output in the year started this month may total 1.65 million metric tons, according to the median of eight estimates from traders surveyed by Bloomberg. That compares with 1.72 million tons forecast in the survey last month and the previous crop of 1.6 million tons.
The lower projection comes as rival Indonesia braces for a smaller harvest amid dry weather brought by the strongest El Nino in almost two decades. The global market is set for an output deficit of 3.5 million bags in the 2015-16 season, Winterthur, Switzerland-based merchant Volcafe estimates. While Robusta futures are down 17 percent this year, prices rose 5.7 percent from a 22-month low touched last month.
“Now that the harvest has started with some selective picking, we can see that the size of beans is smaller than usual because of below-normal rainfall,” said Phan Hung Anh, deputy director of Anh Minh Co., a coffee trader based in Dak Lak. “Low coffee prices have also discouraged growers from investing and replanting. They’re replacing old coffee trees with pepper or fruit like durian.”
Precipitation from May to September in Dak Lak, which accounts for about 30 per cent of the harvest, was 23 per cent lower than a year earlier, according to the Meteorology and Hydrology Department. Rainfall in October in Central Highlands and the southern part of Vietnam may be 15 percent to 30 per cent below the average of previous years, the National Centre for Hydro-Meteorological Forecasting said on 1 October.
Bloomberg News, edited by ESM
