Coffee exporters in one of the world’s top producers are facing losses as they struggle to get their hands on beans, with weak prices dissuading farmers from selling.
Cargoes from Vietnam, the biggest producer of robusta, will probably fall considerably in April and May, according to the country’s top shippers. Low coffee prices globally are encouraging farmers to hoard their harvest, meaning small exporters could default on their contracts or face delays delivering beans to clients, said Le Tien Hung, Chief Executive Officer of No. 2 shipper Simexco Daklak.
“If the sluggish sales by farmers continue, several exporters are likely to be short of supplies for their contracts,” said Phan Hung Anh, CEO of Quang Minh Coffee Trading JSC. Anh sees his firm’s exports this season falling to 45,000 metric tons from 60,000 tons in the previous crop, though says he has enough inventory to cover orders for now.
Coffee prices have tumbled over the last two years as top supplier Brazil keeps churning out more beans, helped by a currency devaluation. Meanwhile, higher-cost producers like Colombia, Costa Rica and Peru are struggling after prices sank below $1 a pound.
The price of beans is now below 33,000 dong ($1.42) per kilogram in Vietnam, and the majority of farmers have suspended sales, according to the country’s biggest exporter, Intimex Group.
“Exporters have no contracts to sign and no beans to sell,” said Do Ha Nam, Intimex chairman and head of Vietnam’s top 20 coffee exporters club. The company is likely to miss its shipping target of 520,000 tons this year, he said.
Robusta prices in Vietnam’s coffee capital of Dak Lak traded at 32,500 dong per kilogram on Thursday, 13 percent lower than a year ago.
To be able to purchase beans to fulfill their signed contracts, shippers have to raise the offer price they pay farmers to above the current export price of 31,000 dong per kilogram, Simexco’s Hung said. Major exporters may be able to commit to their contracts in April and May but could still see losses, according to Hung, who estimated his company’s shipments this season may fall to 95,000 tons from 98,000 tons in the previous one.
Coffee exports from Vietnam fell to an estimated 160,000 tons in March, 24 percent lower than the same period last year, according to data from the General Statistics Office. That was the third consecutive monthly drop and the lowest for March since 2017. Vietnam has shipped 865,000 tons of coffee since the start of this season in October, similar to the same period in the last crop, the data showed.
