HO CHI MINH CITY: Coffee shipments from Vietnam will set a new record this year, supported by global demand for its key robusta variety.
Exports of all varieties are likely to top 1.8 million tonnes, according to Do Ha Nam, the chief executive officer of Intimex Group, the largest shipper in the country. Nam is also vice-head of the Vietnam Coffee and Cocoa Association, the main industry grouping in the world’s largest robusta grower.
“The world market has consumed all the coffee shipments from Vietnam,” Nam said in an interview. “Supplies have been insufficient to meet demand.”
Global consumption of robusta, mainly used by companies including Nestle SA to make instant coffee, is forecast to climb to a record this season, supported by growing demand for the instant variety in developing markets.
That’s good news for farmers in Vietnam, who enjoyed a 10% jump in local prices in October as global benchmark futures rebounded.
To feed that demand, Intimex this year added three robusta processing plants with a combined capacity of 180,000 tonnes, bringing its total capacity to 750,000 tonnes, Nam said last week.
The company expects its overseas sales to grow 20% to an all-time high of 510,000 tonnes this year. As well as being an exporter, Vietnam imports beans for re-export and for domestic use.
Vietnam’s production in the 2018-2019 year that started last month may climb just over 2% to 1.83 million tonnes assuming normal weather, according to the median estimate of 14 traders surveyed by Bloomberg.
That compares with 1.82 million tonnes in a previous survey, and a 1.8 million tonnes forecast by Intimex and Simexco Dak Lak, the second-largest exporter.
The country’s agriculture ministry in July said production would surpass 1.8 million tonnes.
Harvesting began in Dak Nong in late October. Other key areas, including the coffee “capital” Dak Lak, would start collecting beans around the middle of November, RCMA Asia Pte Ltd said in an e-mailed report.
RCMA expects a slight reduction in the estimated record crop triggered by fungus diseases mainly in Dak Nong and unusual cherry droppings in Gia Lai.
The group earlier projected that 2018-2019 season output would rise to 1.92 million tonnes. It sees exports at a record 1.76 million tonnes this season.
Global demand for robusta coffee will rise to an all-time high of 71 million bags this season, compared with 64 million tonnes in 2016-2017, according to an RCMA forecast.
The worldwide market for instant coffee is set to expand 4.7% a year through 2023 to US$14bil from US$10.4bil in 2017, market research company IMARC said in a report.
Demand in emerging markets is expected to grow significantly in the next five years, IMARC noted in a separate report.
Recent mostly dry and sunny weather in Vietnam is favourable for harvesting and drying of new-crop beans, according to RCMA.
Precipitation in the Central Highlands, the major coffee-growing belt, is expected to be 20%-50% below average from now through April, the national forecasting centre said on its website.
Farmers end-season reserves are in line with a year ago and the five-year average, the traders’ survey from late October shows. — Bloomberg