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Coffee dips on crisis, oversupply
The economic crisis and a bumper Robusta coffee crop in Viet Nam have dragged down coffee prices on both the international and domestic markets.
The price on the London International Financial Futures and Options Exchange (Liffe) came down below the psychological level of US$2,000 per tonne last Monday.
Vietnamese exporters have been reluctant to sell at the low level due to the uncertainty with the weather, the start of the coffee crop harvest, and banks' refusal to provide credit.
Nguyen Minh Ban, director of the Dong Nai-based Minh Huy coffee company, said: "The bid is too low to sell. Even at minus $70 per tonne FOB, I cannot sell for the moment because of wet weather in coffee-growing provinces for many days."
The continuous rains in the Central Highlands in the past week have had a certain influence on Liffe Robusta prices.
Three weeks ago, experts believed that the new harvest would bring coffee beans to the market by mid-October.
However, four storms one after the other have brought more rains and the harvest is likely to be delayed.
Some farmers said the new beans would only reach the market by the end of November or early December if the sun starts to shine again within a week.
The late arrival of the new harvest last week helped slow down the price fall in the local market. Robusta coffee grade two with 5 per cent black and broken beans for delivery in December fetched VND35,000-36,000 per kilogramme, VND3,000 higher than 10 days before.
The 2011-12 coffee crop began on October 1 and will be harvested in September 2012.
Global coffee output next year is estimated by the International Coffee Organisation (ICO) at 130 million bags (60kg per bag) and by the US Department of Agriculture at 135 million bags.
It is down from this year because Brazilian Arabica production will fall following the bumper crop this year as the coffee trees will be "tired" and must have a year's hiatus.
The Viet Nam Coffee&Cocoa Association (Vicofa) estimates the country's output at 18 million bags.
But others like the ICO, Reuters news agency, and ABN Amro bank estimate varying levels rising all the way to 23.5 million bags.
All of the estimates place the output equal to or higher than previous forecasts.
But Nguyeãn Nam Hai, Director of HCM City-based coffee surveyor Cafecontrol, pointed out that Vicofa chairman Luong Van Tu had made a wrong prediction about this year's exports, estimating it at 18 million bags, or 3.5 million bags less than it actually turned out to be.
vietnamnews
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