Vietnam drought to cut coffee output in key growing province

Drought could cut coffee production in Vietnam's top growing province of Daklak by around a third in 2016/17 to its lowest in a decade, a local government official said on Thursday. Lower output in the world's top producer of robusta beans, along with tight supply from Brazil and Indonesia, could help keep global coffee prices firm in coming months. Although its impact on exports is expected to be minimal as traders say many farmers have so-called 'carryover' stocks left from last season.
The drought could crimp the Daklak coffee crop by around 30 percent from the 450,000 tonnes predicted previously, said Nguyen Hai Ninh, deputy chairman of the Daklak People's Committee, the provincial government. "Damage from the drought is mainly in coffee," Ninh told Reuters on the sidelines of a trade promotion forum in Hanoi. Water shortages caused by the El Nino weather pattern since this February have affected 30 percent of the Central Highlands' coffee area, of which 40,000 hectares have been ruined, the Vietnam Coffee and Cocoa Association has said.
Rain was expected to return only in June, about a month later than usual, Ninh said. So far nearly 33,000 hectares (81,500 acres) of coffee in Daklak have faced water shortages, of which some 4,400 hectares were ruined as of early April, Ninh said. The affected area represents 16 percent of Daklak's 204,000 hectares of coffee under plantation at the end of 2015.
Daklak, which accounts for about a third of the country's coffee output, harvested 449,000 tonnes (7.48 million 60-kg bags) in the previous season ended September 2015, according to the provincial agriculture department. Given a 30-percent drop, Daklak could yield just 315,000 tonnes from its next harvest due to start in October, the lowest since the 2005/2006 crop when output stood at 257,000 tonnes, based on government data.
Coffee traders earlier said parts of Daklak's coffee farms had switched to pepper in the past year thanks to higher prices for the spice. But Daklak's coffee exports could still be similar to 2015 at around 200,000 tonnes, said Huynh Ngoc Duong, deputy head of Daklak's industry and trade department.
"Farmers' stock carried over from the 2014/2015 crop is huge, so the province's export volume would not change much," he said. Traders have estimated Vietnam had a record of between 350,000-500,000 tonnes of coffee in carryover stocks from the previous 2014/2015 season.