Coffee growers here don’t like the price they are getting for their robusta beans, so they are hoarding supplies in hope of better returns in the future.
A recent survey of eight traders by Bloomberg News indicated growers and middlemen held back about an estimated 85,000 tons of beans or 5% of the coffee crop as of mid-September. Le Tien Hung, chief executive officer at Vietnam’s No. 2 exporter Simexco Daklak, told the news service it’s likely shipments will continue to dwindle in October.
Coffee is trading at a nine-year low and robusta futures are down about 14% this year as a result of plentiful supplies. Investors think prices will go even lower, Bloomberg reported.
“We dare not to sell more at this point as we may not gather enough supplies,” Hung said. “Several traders have wrestled to fulfill their October contracts.”
Hung said he expects Vietnam to ship no more than 120,000 tons in September and October. That would be the lowest two-month shipment in more than eight years when exports totaled about 60,000 tons, according to customs data. Overall coffee production in Vietnam is also down, according to the report. Lower prices are encouraging farmers to switch to more profitable crops such as green beans.