Robusta coffee prices could find support from growing dryness concerns, the International Coffee Organization said, even as a senior figure in Vietnam warned the country’s exports could tumble to a multi-year low.
“Speculation over potential supply concerns, particularly in robusta, is mounting,” the ICO said.
A lack of rainfall “affecting supply expectations” in Vietnam, the top robusta-producing country, and Espirito Santo, Brazil’s biggest robusta-growing state, “could lend support to robusta prices in the near future”.
The comments came as the Vietnam Coffee and Cocoa Association, Vicofa, warned that the country’s exports could in 2016 drop to 1m tonnes.
Shipments have not fallen below 1m tonnes since at least 2008, Vietnamese customs data show.
The Vicofa forecast reflected in part increases in Vietnam’s own consumption of its coffee crop, with domestic use levels estimated to have doubled over the past decade to 10% of the harvest.
However, the association also flagged a lack of rain in the country’s Central Highlands, the main coffee-growing region, which has been hit by a drought billed as the worst in three decades.
A local government official in Daklak – Vietnam’s top coffee growing province, responsible for some 30% of domestic output – said last week that the province’s output could fall by one-third in 2016-17, to the lowest in a decade.
Daklak has, in the past 10 days, received 15.4mm of rainfall, and is expected to receive less than 20mm over the next 10 days, a below-average amount, according to the country’s Meteorology and Hydrology Department.
Meanwhile, in Brazil, the dent to production from low rainfall levels in robusta-growing areas have begun to become evident from results of the early harvest in Rondonia.
In Rondonia, Brazil’s second-biggest robusta-growing state, “the low volume of rains during the crop, limited productivity, and producers estimate 10-15% more grains will be needed to fill up a coffee bag,” research institute Cepea said.
Cepea said its sources were talking of a Rondonia harvest of “less than 1.2m bags”, well below the forecast of 1.62m-1.73m bags from official crop bureau Conab.
In the arabica market, the ICO also flagged the dryness, blamed on El Nino, in Colombia, the second-largest producer of the variety.
“While production reached 7.3m bags in the first half of 2015-16, there are increasing concerns that dryness caused by El Nino could reduce output in the second half of the year,” the organisation said.
The ICO flagged reports that the dryness “could increase susceptibility” among Colombian plantations to coffee cherry borer, an insect pest.
(Source – http://www.agrimoney.com/news/ico-flags-support-to-robusta-prices-from-brazil-vietnam-dryness–9520.html)