Hoarding stock in the hope of a price increase is risky business, but it’s a gamble that more and more Vietnamese coffee farmers are taking.
A report suggests that coffee growers in Vietnam, one of the world’s leading producers of robusta, believe that the value of coffee will pick up and as a result their coffee reserves are the largest they’ve been in five years.
Bloomberg looked at a number of different figures supplied from market trader worked out an average. They believe that as of the end of last month, roughly 28% of Vietnam’s crop is being withheld from sale.
In comparison, about 15% of the harvest was placed in storage this time last year.
“I want to wait for good prices,” said Tran Thanh Nga.
“Prices rose in late June but they were not high enough for me.”
Nga, a thirty-two year-old farmer, also admitted that she hadn’t been selling her coffee beans recently and had amassed a four-ton stockpile
The price rise Nga referenced was the largest one since February 2014, but even that hasn’t tempted a horde of hoarding farmers to sell.
According to Nga, local prices need to reach at least $1.85 a kilogram before she’ll even considering going to market and it is apparently the same for a number of others.
But not everybody: There have been instances of some farmers cashing in, but they’ve been few and far between.
Yet we must remember that this gameplan is very much a double-edged sword, a fact that Phan Hung Anh of the Anh Minh Company pointed out:
“On the one hand, prices may get better. On the other hand, buyers may switch to supplies elsewhere and once they’ve done that it may be hard for them to switch back to Vietnam.”