Vietnam’s coffee suffers from crop failure, prices fall
Vietnam’s coffee exports may fall by 25% this year to 1 million tons, a 20-year low.
The lack of water for irrigation is threatening 165,000 hectares of coffee growing area, or 30% of total area in the Central Highlands.
Vicofa’s chair Luong Van Tu predicted that Vietnam’s coffee exports may decrease by 25% this year.
However, though news about the crop failure in Vietnam is known, the prices in the world market have not increased. |
A report by the Ministry of Agriculture and Rural Development (MARD) showed that in the first four months of the year, Vietnam exported 681,000 tons, worth US$1.16 billion, an increase of 44.6% in export volume and 18.2% in value.
Also according to the ministry, the average export price in the first three months of the year decreased by 18.3% compared with the same period of 2015, at US$1,697 per ton.
However, the export price depends on the prices fixed in the contracts signed before.
Meanwhile, businesses are still waiting for clearer signs about Vietnam’s coffee output; therefore, the coffee price still has not gone up.
Experts said the 2014-2015 crop price was low because of heavy fluctuations in the gold and crude oil markets and the repeated changes of the US dollar value against the other currencies.
These prompted speculators to adjust their investments and focus on business fields which can bring optimal profits. As they sold coffee in large quantities, the price dropped sharply.
In general, Vietnamese exporters sell coffee at prices lower by US$50-US$100 per ton. Analysts estimated that Vietnam loses US$150 million a year in coffee export because of this.
Le Tien Hung, general director of Simexco Dak Lak, said the drought would raise more difficulties for Vietnam’s coffee exports.
Vietnamese farmers hoped that the crop failure would lead to the price increase; therefore, they stockpiled coffee, planning to sell when the prices goes up. However, the plan has failed.
Robusta coffee in London is now traded at US$1,554 per ton, remaining unchanged.
The consumption in the domestic market accounts for 10% of the total coffee output in Vietnam, an increase of 5% compared to 10 years ago.
Pham Thi Kim Dung from IPSARD, an institute on agriculture development policies, noted that in the domestic market, coffee roasters provide coffee on short-term orders and under contracts with spot deliveries.
The increase in the domestic market, and output decrease, which leads lower supply for exports, will push the export prices up.
