Source: Zhitong Finance
Vietnam, the world's largest producer of robusta beans, still needs more rainfall to ease the drought conditions in coffee growing regions.
Although global coffee prices have plummeted due to improved weather, Vietnam, the world's largest producer of robusta beans, still needs more rainfall to ease the drought conditions in coffee growing regions. Previously, the price of Robusta coffee once climbed to its highest level in 45 years in April due to tight supply due to the drought in Vietnam. However, as the rain hit, London futures prices fell by more than 20% in less than two weeks. As of press release, the global benchmark London Robusta futures price was reported at $3,601 per tonne.
Zheng Deming, chairman of the Buon Ma Thuot Coffee Association (Buon Ma Thuot Coffee Association) in Dak Lak Province of Vietnam, pointed out that although rainfall has begun in the central highlands, rainfall distribution is uneven, and the total amount is still insufficient to meet the needs of coffee plants during the critical fruit formation period.
According to him, about 40% of coffee trees in Dak Lak province (accounting for one-third of Vietnam's total harvest) are still not getting enough moisture. He predicted that the province's total rainfall this month could be reduced by 50% compared to the same period last year. Furthermore, the average rainfall in Dak Lak province is usually 200 mm in May, but the current rainfall is only 20-30 mm.
Vietnam's National Meteorological Service predicts that in the last 10 days of May, the drought situation in the coffee growing zone may ease, but the monthly rainfall will still be 40% lower than the historical average.
Notably, coffee prices have soared in the past two months due to crop problems in Brazil and Vietnam. In particular, concerns about restrictions on production of Robusta coffee due to excessive drying in Vietnam have brought the price of Robusta coffee to a new historical high.
As the world's largest producer of Robusta coffee beans, Vietnam's tight supply is a major factor driving up prices. On March 26, Vietnam's agricultural department predicted that due to the drought, Vietnam's coffee production would drop 20%, reaching a four-year low of 1.472 million tons. Meanwhile, the Vietnam Coffee Association said that coffee exports are expected to drop 20% year on year to 1.336 million tons.
Marex Group Plc expects the global Robusta coffee market to experience a supply gap of 2.7 million bags next year due to reduced production in Vietnam.