Vietnam Coffee Inventories Jump Threefold Amid Grower Hoarding

Monthly coffee inventories in Vietnam, the largest robusta producer, are more than three times higher than last year as growers continued hoarding amid slumping futures prices.
Farmers in the Southeast Asian country were holding onto 320,000 metric tons, or 20 per cent of the harvest, at the end of August, according to the median estimate of eight traders surveyed by Bloomberg. That compares with 90,000 tons, or five per cent of the crop, a year ago.
A large amount of carry-over stocks will add to pressure on prices as the harvest starting next month is forecast to match the 2013-2014 record. Robusta futures have slumped 17 per cent this year, a move that’s only been partially offset by three devaluations of Vietnam’s dong.
“The dong devaluation wasn’t big enough to offset the slump in futures, so prices offered to local farmers are still low and can’t spur sales,” said Phan Hung Anh, deputy director of Dak Lak-based coffee trader Anh Minh Co. “Growers also have income from other crops like pepper or durian so they’re not interested in selling coffee.”
Coffee prices are likely to remain under pressure because producers in Brazil and Indonesia are strongly pushing exports after their currencies collapsed, Anh said. The dong has fallen less than three per cent since the end of June, compared with a 19 per cent slump in Brazil’s real and about a seven per cent slide in Indonesia’s rupiah.
The coming harvest is forecast to total 1.72 million tons, higher than the previous crop of 1.6 million tons, the survey shows. While precipitation in Dak Lak last month was 22 per cent lower than the amount a year earlier, it’s only three per cent below average, government data show.
Coffee prices are likely to remain under pressure because producers in Brazil and Indonesia are strongly pushing exports after their currencies collapsed, Anh said. The dong has fallen less than three per cent since the end of June, compared with a 19 per cent slump in Brazil’s real and about a seven per cent slide in Indonesia’s rupiah.
Bloomberg News