Extended rains in Vietnam might hurt coffee output in the 2018/2019 season, while supply tightened in Indonesia after harvest ended there, traders and experts said on Thursday. Vietnam, the world's second top coffee producer after Brazil, received more rains in its main coffee growing region of Central Highlands, with traders and experts fearing it may slightly hurt the 2018/2019 crop which starts next month.
Vietnam's 2018/2019 output is seen down 2.3 percent on year at 1.71 million tonnes (28.5 million 60-kg bags) due to rainfall and some coffee farmers switching to grow fruits, the chairman of the Vietnam Coffee and Cocoa Association (Vicofa) said on Thursday. Around 102,000 hectares of coffee land have been switched to grow fruits like avocado and durian, or for mixed use of coffee trees, pepper and other fruits, Vicofa Chairman Luong Van Tu told Reuters.
Extended rains make it hard for coffee trees to absorb fertiliser and also affect their ability to hold cherries. "Some cherries are falling off old trees, but the younger trees are fine," said Le Duc Huy, deputy general director of Simexco, which is based in Daklak, Vietnam's top coffee growing province.
If the cherries density was kept like it was earlier this year, the 2018/2019 crop output could have increased around 7 percent annually. But right now, it might be around the same as the previous crop, Huy said. Independent coffee expert Nguyen Quang Binh said if the rains lasted longer, it would hurt the quality of beans and farmers won't be able to dry cherries after harvest. Vietnam's harvest normally starts at the end of the fourth quarter.
Farmers in the Central Highlands, Vietnam's largest coffee growing area, offered coffee at 32,600-32,800 dong ($1.40-$1.41) per kg, traders said, recovering from a 2-1/2-year low of 32,000-32,500 dong hit last week. Exporters offered Vietnam's 5-percent black and broken grade 2 robusta at a discount of $40 per tonne to London's November and January contracts, compared with a $30-$40 discount to the November contract last week, traders said.
Scattered showers are expected over the next week in the Central Highlands region, the National Centre for Hydro-Meteorological Forecasting agency said on its website. In Indonesia's Lampung province, exporters quoted premiums for the grade 4 defect 80 robusta at $50-$70 a tonne, same as last week, as demand picked up while supply declined after the main harvest ended this month.
"Supply is a bit tight... while global demand is still quite healthy. A lot of exporters now are on wait and see, waiting for better pricing," one exporter said.
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