Vietnam coffee harvest may drop 30% on drought, Vicofa Says

The coffee harvest in Vietnam, the biggest grower of robusta beans used by Nestle SA (NESN) in instant drinks, may decline for second year because of drought in the main growing regions, according to a producers’ group.

Output may drop 30 percent in 2013-2014, Luong Van Tu, chairman of the Vietnam Coffee & Cocoa Association, or Vicofa, said yesterday, without giving a specific forecast. Production fell 25 percent in 2012-2013 from 1.5 million tons a year earlier, he said. A Bloomberg survey published on March 7 estimated the 20122013 crop at 1.43 million tons.

Reduced supplies from Asia may boost robusta prices for a second year. Exports from Indonesia, the third- largest shipper, are falling because of higher domestic consumption, a Bloomberg survey showed last month. Global usage of robusta has expanded as demand has dropped for the costlier arabica beans, brewed by Starbucks Corp. (SBUX), according to Macquarie Group Ltd.

“There are already tens of thousands of hectares that have no hope in the next coffee season,” Tu said at an industry conference in Buon Ma Thuot City. For other areas, the beans will likely be small, he said. Robusta futures rallied to $2,188 a ton on NYSE Liffe on March 8, the highest intraday level since Oct. 4. Most-active prices have advanced for three weeks, taking gains to 13 percent this year. They gained 6.3 percent in 2012.