(Bloomberg) -- Coffee exports from Vietnam — the world’s biggest robusta grower — are likely to stay tight through the year-end, putting more pressure on prices that have jumped by almost two-thirds in 2024.
Drought has weighed on production from the Southeast Asian nation, and there’s also a threat the La Nina weather pattern, which typically brings more rainfall there, could further hamper output when it likely sets in later in the year. That risks exacerbating tight global supplies that recently sent a robusta gauge surging to the highest since the 1970s.
A significant rebound in supplies may not happen until as late as December, said Thai Nhu Hiep, director of exporter Vinh Hiep Co. and deputy head of the Vietnam’s national coffee association. There could be too much rain from La Nina during the fruit collection period, so the harvest is unlikely to be smooth, he said.
Production in the new season, which starts in October, may be down 5% to 1.56 million tons because of the earlier drought, according to the median estimate of four traders and exporters surveyed by Bloomberg. While rainfall has increased recently, the prospect of a La Nina is now causing worries.
“Supplies from Vietnam would be in peril if there was a comeback of La Nina,” said Do Ha Nam, chairman of Intimex Group, Vietnam’s biggest coffee exporter. “Farmers would let fruit sit ripe on the trees and traders couldn’t have beans to fulfill both delayed and new commitments.” Nam is also a deputy chair of the coffee association.
Exports dropped to 70,202 tons in June, the lowest level for that month since the 2012-13 season, according to official data. Shipments in the first nine months of the season that ends in September were down 11.3% year-on-year.
For the last three months of the season, exports may be around a combined 150,000 tons, according to the survey. That would be less than half of what Vietnam has exported for the period in the last five years.
©2024 Bloomberg L.P.
