Next Coffee Crop Hurt by Early Flowering

Viet Nam, the world’s second-biggest grower of coffee, may produce less than 16 million bags in the 2009-10 year because of premature flowering, according to the Viet Nam Coffee and Cocoa Association. The trees have started forming fruit in some plantations because of early flowering and cherries have been scattered on the ground, the association said on its Web site. The 2008-09 harvest was 16 million bags, said Luong Van Tu, chairman of the association, March 4. Each bag weighs 60 kilograms (132 pounds).

A reduced crop may support prices of the country’s bitter- tasting robusta variety used in espresso and in instant coffee by Nestle SA and Kraft Foods Inc. Coffee for delivery in May has dropped 32% in the past year in London on increased global output and a slump in investor< demand for commodities. “Growers are concerned that it may be hard for the 2009-10 crop to reach 16 million bags,” the association said today in its first public estimate of the next harvest starting in October. Early rain spurred premature flowering and fruit loss.

The group based its estimate on recent surveys in Dak Lak and Lam Dong, the two main growing areas that account for about 70 percent of output. Robusta coffee for May delivery declined 0.8% to $1,542 a ton in London today. Coffee growers in Vietnam are getting easier access to credit, helping them hold onto beans until prices improve, according to Ho Sy Trung, head of the import-export department at Phuoc An Coffee Dak Lak Co., one of the largest growers in Dak Lak in central Viet Nam.

More Credit

Vietnamese lenders have extended 179 trillion dong ($10 billion) in loans since Feb. 1 as part of the government’s stimulus package to mitigate the economic slowdown, the State Bank of Vietnam said last week. Coffee is Vietnam’s second-most valuable crop, and a key foreign-exchange earner. With “more than 70% of the 2008-09 production contracted to sell,” growers are waiting for prices to improve, and the credit extension is helping,

Source : Vietnam Business Finance