Market Ambivalent As Vietnam Faces Drought

With reports of an imminent dry spell on top of an already barren period, the Vietnam Coffee and Cocoa Association (Vicofa) is predicting that the country’s coffee crops will take a battering over the next couple of months.

In some parts of the country, river levels are as much as 80% below the average for this time of year.

“The situation with drought will seriously affect robusta coffee production,” a spokesperson for the association said, claiming that the area that will be hit the hardest will be the Central Highlands region.

However, despite these grim statements industry analysts are not predicting widespread crop losses or an increase in the price of Vietnamese coffee in the near future.

Speaking on the issue, Jack Scoville of the Price Futures group said that it is unlikely the dry spell will cause the global market to react thanks to some bumper harvests in previous years.

“Normally it would have much more effect [but] there is plenty of supply from previous years,” he said.

Since the last harvest, the demand for Vietnamese robusta has cooled. This, coupled with farmers withholding stock in search of better prices, has seen stock levels gradually increase. So if harvest levels dip this year, last year’s “leftovers” can easily cover any shortfall in stock.

picture: Marc Nijdam (used under creative commons)