Vietnam Cuts Coffee Harvest Estimate on Poor Weather

By Nguyen Dieu Tu Uyen

March 4 (Bloomberg) -- Vietnam, the world’s second-largest coffee producer, may harvest 16 million bags this year, 6 percent less than initially forecast after poor weather trimmed the size of beans, according to a producers’ group.

“Bad weather at the start of the crop has considerably raised the proportion of small beans,” Luong Van Tu, chairman of the Vietnam Coffee and Cocoa Association, said today. The association in December had forecast a crop of 17 million bags in the year to Sept. 30. A bag weighs 60 kilograms (132 pounds).

A smaller-than-expected 2008/09 crop may help to arrest a drop in robusta prices, which have declined 45 percent over the past year, including falls over the five days to yesterday. The nation’s crop was estimated at 20 million bags in January, according to a forecast from Belgian bank Fortis.

“We’ve also had to reject more black beans that were caused by rains during the picking and drying period,” Tu said in a telephone interview from Hanoi, Vietnam’s capital. Black beans are of low quality and don’t meet standards for international shipment; most are discarded.

Robusta coffee for May delivery dropped $17, or 1.1 percent, to $1,504 a metric ton yesterday, the lowest closing price since the 10-ton contract started trade on London’s Liffe exchange in January 2008.

Two weeks of prolonged rains last year interrupted the harvest, according to traders including Nguyen Ngoc Thu in Ho Chi Minh City for Madrid-based Icona Cafe, which is among the 10 biggest importers of Vietnamese produce. The rains delayed the picking of berries and hampered drying, they said.

Vietnam’s 2008/09 crop might have been lower than 19.5 million bags due to the heavy rains, smaller beans and increase in the quantity of black beans, Hong Kong-based SW Commodities said in a March 2 note. F.O. Licht has estimated the crop at 20 million bags, up from 18 million a year earlier.

To contact the reporter on this story: Nguyen Dieu Tu Uyen in Hanoi at uyen1@bloomberg.net.