Vietnam coffee growers hoarding most beans in 5 yrs

Hanoi

COFFEE growers in Vietnam are storing the most beans in at least five years as they bet the biggest surge in prices in 16 months has further to run.

Farmers held 28 per cent of the crop in the world's largest robusta producer at the end of last month, going by the median of eight trader estimates compiled by Bloomberg. Unsold inventories totalled 440,000 tonnes, the survey showed. That compares with 250,000 tonnes, or 15 per cent of the crop, held at this time in the previous season.

Futures in London last month rose the most since February 2014 while beans in Vietnam's main growing region of Dak Lak jumped to the highest in two months. While that's encouraging farmers to hold supplies in anticipation of higher prices, surging stockpiles may drive prices lower when the next harvest starts in October, according to Anh Minh Co, the country's largest private exporter by volume.

"I want to wait for good prices," said Tran Thanh Nga, a 32-year-old farmer who hasn't sold any beans from her four-tonne stockpile. "Prices rose in late June but they were not high enough for me.

Robusta on ICE Futures Europe settled at US$1,738 a tonne on Monday after prices surged 9.3 per cent in June. In Vietnam, beans traded at 36,800 dong (S$2.30) a kilogramme on Monday after climbing to 39,000 dong on June 25, the highest since April 24, according to data from the Trade & Tourism Center in Dak Lak.

Local prices need to be at least 40,000 dong to encourage selling, according to Ms Nga. Shipments from Vietnam slumped 36 per cent in the first half of this year to 690,000 tonnes, the lowest since 2010, according to the Statistics Office.

"The gains in prices induced some sales," said Phan Hung Anh, deputy director of the Dak Lak-based Anh Minh Co.

After a drier-than-usual month of May the weather has started to improve, boosting prospects for the next crop. The harvest starting October will total 1.72 million tonnes, compared with the previous crop of 1.56 million tonnes, as rainfall returns to normal levels in spite of a strengthening El Nino. That would match the record output in 2013-2014. BLOOMBERG