Vietnams 2017/2018 coffee output to rise 10 pct on good weather, prices

A Vietnamese woman picks cherries at her coffee farm outside Buon Ma Thuot Town in the central highland province of Dak Lak. Vietnam's next 2017/2018 output is forecast to rise 10 percent to 28.6 million bags (1.72 million tons) on good weather, a USDA report said. Photo by Reuters

Good news for exporters with the 2016/2017 crop likely to fall short of expectations.

Vietnam, the world's largest robusta producer, is forecast to harvest 28.6 million bags (1.72 million tons) of coffee from its next 2017/2018 crop, a rise of 10 percent from the current season, thanks to favorable weather conditions and higher domestic prices, a U.S. Department of Agriculture attache said.

Higher output from Vietnam, which stands only behind Brazil in terms of global coffee production, supports an industry view which envisages stable global supply in the next crop year.

"Adequate rains starting in January through March helped coffee trees trigger more branches and early flowering," the USDA attache said in a May 17 report.

High domestic prices have also helped farmers purchase sufficient fertilizer, triggering higher yields even though the total planting area remains unchanged, the report said.

Vietnam's coffee crop year lasts between October and September, starting with the harvest in the Central Highlands region that accounts for around 90 percent of the country's output.

While it is still too early to forecast the size of the next harvest, Vietnam's coffee belt has seen favorable weather for production  in recent months, said Bach Thanh Tuan, head of the Community Development Center, a state-backed facility in Dak Lak Province. The center is tasked with ensuring sustainable production in the province as well as the entire region.

"The supply outlook for 2017/18 seems increasingly positive," the London-based International Coffee Organization said in its April report, adding that initial concerns about frost in Brazil and a shortage of rainfall in Vietnam have eased.

Coffee prices on the domestic market rose to VND47,500 ($2.1) per kilogram on March 21, the highest since September 2011. The price hike coincided with the coffee watering period, during which Vietnamese growers feed fertilizer to their trees.

Smaller 2016/2017 crop

The USDA report has revised down its output forecast for the ongoing 2016/2017 crop year by 2.6 percent to 26 million bags, saying extended rain in October-November 2016 had damaged cherries and reduced the quality of beans.

Vietnam's coffee exports in the next 2017/2018 crop year are forecast to edge up 0.4 percent to 26.65 million bags, the report said. The export volume includes green beans, soluble and roasted coffee.

Consumption of roasted, ground and soluble coffee in Vietnam in the next 2017/2018 season is projected to rise 2 percent to 2.93 million bags, the report said.

It cited the continuing growth of coffee shops, saying domestic market competition remains fierce due to the arrival of foreign brands.

Even though Vietnam's coffee exports fell to 2.25 million bags last month, a five-month low, based on Vietnam Customs data, the shipments still helped extend Vietnam's position as the world's biggest coffee exporter, which the Southeast Asian nation seized from Brazil in March. 

Robusta beans account for most of Vietnam's exports and are used mainly for making soluble coffee.

Top producer Brazil shipped a combined 2.13 million bags of arabica, conillon (a variety of robusta), soluble coffee and roasted beans in April, down 13.5 percent from a year ago, the Brazilian Coffee Exporters Council said in a report released earlier this month.