Severe Drought Effecting Robusta in Vietnam

The extreme weather conditions have been holding tightly the Vietnam’s Central Highland coffee belt. This is the worst drought in 30 years.

According to the Vietnam’s National Center for Hydro-Meteorological Forecasting, the temperatures are expected to be 0.5 to 1 degree Celsius higher than usual. The 599 reservoirs used for irrigation in Dak Lak province are up to 20% non-functional (as reported in April) as 118 reservoirs have dried up increasing from 30 non-functional reservoirs around the same time last year (Bloomberg).

All the bad news simply adds up to the production cut-down the world’s largest Robusta producer is expected to face this year-estimated at 30%. About one-fifth of the trees is already damaged or dried (Reuters).

The government figures not only reflect the 18% fall in the number of trees but also the plantation area used for growing coffee can shrink to 600,000 hectares in the year to come because of drought and crop switching (Reuters).

To survive the irrigation costs, the coffee farmers sold their beans in a faster tempo this year as compared to the last two years. 930,000 metric tons or 58 percent of the current crop has already been sold by the end of March, said by the Bloomberg News, survey of seven traders(Bloomberg).

The total output probably is 1.6 million tons. The same was the figure for the last year according to the Bloomberg.

Not just Vietnam, the coffee harvest in Brazil and Columbia are also under the influence of climate change. This caused the Robusta prices to witness 6.2% rise in the prices this March which is the biggest increase since the last year June.

Robusta touched $1,534 a ton on March 23 on ICE Futures Europe, the highest since Jan the 4th. Coffee exports from Vietnam in the first quarter gained 24 percent year on year to 457,000 tons, according to data from the General Statistics Office (Bloomberg).