Vietnam robusta coffee beans stockpiles at three-year low

Coffee growers in Vietnam, the top producer of robusta beans used by Nestle, are probably holding the smallest stockpiles in three years after rising prices boosted sales, signalling a shortage in global supplies.

Farmers had unsold inventories equal to 5 per cent of the record harvest at the end of August from 10 per cent a year earlier, traders estimate. That would be the lowest since 2011. Production may drop 3 per cent to 1.65 million tonnes in the year starting next month, or 27.5 million 60kg bags, the traders say.

Futures in London have advanced 19 per cent this year on speculation that consumption will outstrip supply. The robusta shortfall will be 1.9 million bags and the arabica deficit is poised to be 6.9 million bags in the 12 months from October, according to Volcafe. Drinks makers have been buying more of the cheaper robusta after their discount to the arabica variety widened as much as three-fold this year.

"There's very little coffee left among farmers," said Phan Hung Anh, deputy director of Dak Lak-based Anh Minh, Vietnam's largest private exporter by volume. "The beans are mainly with quite wealthy people, so domestic prices have to reach about 43,000 dong (HK$15.73) to 44,000 dong a kilogram for them to sell."

Robusta futures traded at US$2,011 a tonne on NYSE Liffe yesterday. Arabica, the variety favoured by Starbucks, has risen 66 per cent to US$1.837 a pound this year. The premium of arabica over robusta climbed as high as US$1.166 a pound this year from 34 US cents in December.

The widening gap with arabica had encouraged more roasters to buy robusta, Kona Haque, the head of commodities research at ED&F Man in London, had said.