‘Beanless' Coffee Phenomenon Spells Trouble for Vietnam's Output

(Bloomberg) -- Farmers in Vietnam are coming across a worrying phenomenon: Coffee fruits empty of beans.

Several areas in the world’s biggest grower of robusta coffee have reaped fruits that have no beans inside or where beans are smaller than usual. The empty cherries are most common in Gia Lai province in the north, which normally provides about 15 percent of Vietnam’s crop, according to Simexco DakLak Ltd., the country’s second-biggest coffee exporter.

The unsettling anomaly has reduced expectations that Vietnam will have another bumper crop, with several producers in the country cutting output forecasts. Still, the lower-than-anticipated yield may be some good news for benchmark robusta prices, which have slumped more than 10 percent from a recent peak in May.

‘Beanless' Coffee Phenomenon Spells Trouble for Vietnam's Output

While Vietnam Coffee-Cocoa Association’s Vice Chairman Nguyen Nam Hai said the issue is “small,” it means the country won’t meet this season’s expected output of 1.83 million tons, or 30.5 million bags, forecast in a Bloomberg survey. Simexco and Intimex Group, the country’s largest exporter, earlier this month said they forecast output of 1.8 million tons.

Farmers’ Frustrations

“We’ve heard from different sources about the problem,” said Alex Gruber, director and chief representative at commodity trader RCMA Group’s Vietnam office. “It looks like the crop will be less than expected, probably at or below 31 million bags. That would add to farmers’ frustrations.”

Robusta beans for January climbed 0.6 percent on Friday on ICE Futures, snapping five days of losses. Prices are on course for a second annual decline.

Gia Lai province experienced week-long downpours over several weeks which kept the tree roots from absorbing nutrients, said Le Tien Hung, general director at Simexco DakLak, who cut his forecast for production to between 29.5 million and 29.7 million bags from 30 million bags projected in July.

Non-stop rainfall in the three months from July also prevented growers from adding enough fertilizers, said Tran Xuan Khai, vice head of crop production and plant protection at Gia Lai’s provincial department of agriculture.

©2018 Bloomberg L.P.