Vietnam’s coffee traders cut output forecast by 10 percent
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Traders in Vietnam lowered their coffee output forecasts by 10 percent this week as a bumper harvest came to an end. They now expect an output of about 27 million bags of 60 kg each for the 2018/19 crop year that began on Oct. 1, compared with earlier forecasts of 30 million bags. “We are not surprised to see a lower output as stubbornly low domestic prices have discouraged many farmers to fertilize and water their trees, while weather condition was also not supportive,” a trader based in the province of Dak Lak said on Thursday.
“Farmers in the Central Highlands have harvested all of the fresh beans of the 2018/19 crop year,” he said.
Farmers in the Central Highlands, the country’s key coffee growing area, sold coffee at 33,500-34,000 dong ($1.44-$1.47) per kg on Thursday, compared with 33,200 dong-33,700 dong a week earlier.
“Though output is lower, domestic prices have not risen due to external factors, including larger forecasts by foreign agencies,” said another trader based in Ho chi Minh City.
Vietnam’s coffee exports in January are forecast to be between 150,000 tonnes and 180,000 tonnes, compared with an estimated 160,000 tonnes in December.
Traders in Vietnam offered 5 percent black and broken grade 2 robusta at a $40 per tonne discount to the March contract, compared with a $45-$50 discount last week.
Meanwhile, in Indonesia, trading continued to be muted with traders saying premium for the grade 4 defect 80 robusta stayed unchanged for a fourth straight week at $20-$30 to the March contract.
“Supply may only start coming around April because some areas in Bengkulu will have some harvest then,” said a trader, referring to a province neighbouring Lampung.
Main robusta harvest in southern Sumatra typically takes place around the mid-year, but a smaller harvest usually happens a few months earlier.
Questions & Answers
Q.What is the revised coffee output forecast for Vietnam in the 2018/19 crop year?
What is the revised coffee output forecast for Vietnam in the 2018/19 crop year?
Traders now expect an output of about 27 million bags, each weighing 60 kg. This revised forecast is a 10 percent reduction from earlier predictions of 30 million bags for the current crop year.
Q.Why did traders reduce their output forecast for Vietnam's coffee?
Why did traders reduce their output forecast for Vietnam's coffee?
Lower domestic prices discouraged farmers from fertilising and watering their trees. Also, the weather conditions were not supportive for the crop, contributing to the reduced forecast.
Q.Have domestic coffee prices in Vietnam increased despite the lower output forecast?
Have domestic coffee prices in Vietnam increased despite the lower output forecast?
No, domestic prices have not risen. This is due to external factors, including larger output forecasts from foreign agencies, which are influencing the market.
Q.How do Vietnamese robusta coffee offers compare to last week?
How do Vietnamese robusta coffee offers compare to last week?
Traders offered 5 percent black and broken grade 2 robusta at a $40 per tonne discount to the March contract. This is a smaller discount compared to last week's $45-$50 discount.
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