HANOI: Coffee supply from Daklak, Vietnam's largest growing province, is expected to slow next month when the harvest ends as most farmers and buying agents will wait for higher prices before selling, a senior provincial official said on Friday.
Some analysts expect global coffee prices to surge early next year as tighter bank lending in top robusta producer Vietnam could choke off cash to exporters, cutting supply and pushing up premiums, even as the harvest rolls in.
"Farmers who have small planting areas will have to sell beans for cash before Tet, but overall sales will not be as quick as last year because many others have better finances," said Nguyen Van Sinh, a deputy director of Daklak's Agriculture Department.
Tet is Vietnam's biggest festival, marking the Lunar New Year, which arrives on Jan. 23. Cash demand is high before the market holiday from Jan. 21 to 29.
Farmers with a plantation area of less than 0.5 hectare are considered small households, Sinh said.
Daklak's output this season is forecast to rise 6.5 percent from the 2010/2011 harvest to 425,000 tonnes, or 7.08 million 60 kg bags, Sinh said.
"We will get the precise size of the output after the harvest ends next month," he told Reuters in an interview.
Daklak, in the Central Highlands coffee belt, accounts for a third of the coffee output from Vietnam, the world's second-largest producer after Brazil.
Sinh rejected a Vietnam News Agency report on Friday that Daklak had practically completed its harvest. "The harvest will end by late next month, not now," he said.
Last year, farmers rushed to end their coffee harvest in December to take advantage of good prices.
As for this year, traders said up to 80 percent of the crop had been harvested in key areas and they expected the process to end before Tet.
The large Vietnam crop has put pressure on London's robusta futures market. The March contract ended down $11 at $1,807 per tonne on Thursday but above Wednesday's two-week low of $1,792 per tonne.
Robusta prices in Daklak fell to between 37.7 million and 38.1 million dong ($11,792-$1,811) a tonne on Friday from 38.5-38.6 million dong on Tuesday.
Prices are up 2.7 percent from the 37.1 million dong a tonne at the end of 2010 but below the life-time high of 51.9 million dong a tonne hit on May 11, 2011.
At present, prices are some 60 percent above farmers' production costs. As a result, the government may hold back from approving an industry plan to stockpile at least 300,000 tonnes of coffee during the harvest peak to prevent price falls.
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