Vietnam's coffee harvest is expected to end by early January, and while the government forecast a smaller crop, prices could soften as farmers start sales before the Lunar New Year, traders said on Tuesday. Output of the current 2010/2011 harvest could fall around 15 percent from earlier forecasts to 1 million tonnes, or 16.7 million bags, due to "unfavourable weather", the ruling Communist Party-run Nhan Dan daily said, citing an Agriculture Ministry report.
The harvest ending in Vietnam, the world's top robusta producer responsible for 13 percent of global output, could help cool rising demand as roasters switched purchases with arabica rising to its highest in more than a decade. Arabica hit a 13-1/2-year peak on December 21 in New York.
"Prices will soften further when farmers release their stock and also when exporters rush to fix their contracts," a trader in Ho Chi Minh City said. Higher income from prices currently hovering near two-year highs will help farmers offset losses from a lower output, Deputy Agriculture Minister Diep Kinh Tan said in a report by the official Vietnam News Agency.
Robusta eased to between 35.5 million and 35.8 million dong ($1,822-$1,837) a tonne on Tuesday in the Central Highlands coffee belt, from 36.2 million dong on December 20, which was the highest in 28 months. Export quotations of Vietnam's robusta grade 2, 5 percent black and broken stood at $1,860-$1,870 a tonne on Tuesday, free-on-board basis, from $1,835-$1,850 a week ago.
SALES IN JANUARY Farmers often sell part of their stocks to exporters before Tet, or the Lunar New Year festival that falls in early February, and also to get cash for fuel and fertiliser when they begin watering trees for the 2011/2012 crop cycle after Tet. The Agriculture Ministry's estimate has dismissed a forecast early this month by the Vietnam Coffee and Cocoa Association of a 10 percent fall from its estimate of 17.5 million 60-kg bags due to dry weather following prolonged rains.
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