US officials downplayed the threat to Vietnam’s coffee harvest this year from dry weather, but were cautious on ideas of a surge in stocks, despite a fall in exports underlined separately on Tuesday by official data.
Many commentators have raised concerns for coffee output in Vietnam, the top producer of robusta beans, this year with Olam earlier this month foreseeing lower production in some areas this year, and veteran analyst Judith Ganes-Chase cautioning that “vegetative growth [is] showing extreme stress over the coffee belt.”
Overnight, Mark Nucera, an investment advisor to several billionaires, cautioned of the potential for a sharp drop in Vietnamese coffee yields this year “due to a terrible drought” in the March-May period.
However, the US Department of Agriculture’s Hanoi bureau said that Vietnam’s coffee crop for harvesting late this year had shown “good flowering and cherry setting and so signs of adverse weather, despite some claims of drought-like conditions in Central Highlands”, the top growing area.
While rainfall was proving “still low in comparison with previous years”, recent showers as the rainy season is due to kick in “ease concerns about the lack of water supply and drought and will support the growth of coffee trees”.
Bureau vs Volcafe
The bureau – while cutting to 28.17m bags its estimate for the 2014-15 harvest, some 1.2m bags below the official forecast and the first decline in seven years – pegged next year’s crop at 28.67m bags.
Nonetheless, the forecast is well below that of trading house Volcafe, which last week pegged Vietnam’s crop at 30.5m bags, up from a 2014-15 crop it pegged at 27.4m bags.
The USDA bureau was also more conservative on expectations for Vietnam’s coffee inventories at the close of 2014-15 than Volcafe, which said that, given weak exports so far, ending stocks were “seen accumulating to a record level, some 49% higher from the previous season”.
According to the bureau, inventories will grow by a more modest 12.9% this in 2014-15, on an October-to-September basis, to 2.40m bags, narrowly beating the current record set eight years ago.
In 2015-16, stocks will contract by 7.0% to 2.24m bags.
The bureau’s forecasts imply some pick-up in the pace of exports this season, after a decline of 27% so far, incorporating a government estimate on Tuesday of shipments of 100,000 tonnes (1.67m bags) this month.
That would take the total for the first eight months of the season to 872,100 tonnes (14.53m bags), factoring in a downgrade to 104,400 tonnes, from 120,000 tonnes, in the estimate for April shipments.
The USDA staff acknowledged a dent to Vietnamese shipments from a reluctance by growers and traders to sell to exporters “until prices improve”.
Vietnamese coffee was on Tuesday trading at 34.5m dong ($1,580) a tonne, the lowest since February last year, undermined by a drop last week in London robusta futures to early-2014 levels,
The bureau flagged talk that “farmers and speculators are holding huge stocks, and want to sell their beans when local prices reach 40,000 dong per kilogramme”, or 40.0m dong per tonne.
Nonetheless, it forecast shipments this season falling by a relatively modest 6.6% over 2014-15 overall, to 26.43m bags.
Next season, shipments till rise by 2.3% to 27.04m bags.
(Source – http://www.agrimoney.com/news/us-upbeat-on-vietnam-coffee-crop-but-cautious-on-stocks–8376.html)