Coffee Harvest in Vietnam to Drop From Record on Dry Weather
Coffee production in Vietnam, the world’s biggest grower of the robusta variety used by Nestle SA (NESN) in instant drinks, is poised to decline from a record as dry weather cuts yields, bolstering prices.
The harvest may drop 9.4 percent to 1.45 million metric tons in the season that started Oct. 1 from an all-time high of 1.6 million tons in 2011-2012, according to the median of eight trader and shipper estimates compiled by Bloomberg. That’s less than the 26 million bags (1.56 million tons) estimated by Volcafe Ltd. A bag weighs 132 pounds.
Robusta rallied 16 percent in London this year on rising demand from roasters after arabica beans, favored for specialty drinks such as those made by Starbucks Corp. (SBUX), soared to a 14- year high. A smaller harvest in Vietnam may help sustain the rally, potentially raising costs for Nestle, the world’s biggest food company. Consumption of robusta will grow at a faster rate than arabica, Luigi Lavazza SpA said last month.
“There wasn’t much rain this year, so there wasn’t enough water for the trees to develop and for the beans to grow,” said Mai Ky Van, a deputy director at October Coffee-Cocoa One Member Ltd. in Dak Lak province, Vietnam’s biggest growing region. “Coffee output in my area may fall about 20 percent.”