Vietnam’s March coffee exports dip but global prices may ease on ample stocks

Vietnam, the world’s second largest coffee producer after Brazil, exported 168,000 tons (2.8 million bags) of the commodity in March, down nearly 7 percent on-year, a significant reversal from a 32-percent jump during the same period in 2016, based on government data released on Monday.

However, certified stocks held against the London robusta futures market, and stocks in importing nations are rising, which could put downward pressure on prices, an industry report said.

Vietnam’s March export volume took the country’s total shipments to 834,100 tons for the first half of the 2016/2017 crop year, up 2 percent from a year ago, Vietnam Customs said in its monthly report.

The government had initially estimated the March volume at 180,000 tons. The country’s coffee crop year runs between October and September.

In February, shipments hit their highest monthly level since 2014, based on customs data.

Vietnam’s rising coffee exports have contributed to higher certified stocks on the London robusta futures market, according to the International Coffee Organization (ICO), but the slowing pace could be an early sign that Vietnam may face a shortage of coffee beans in May/June, as forecast last month by top exporter Intimex.

London’s certified stocks at the end of March edged up to 2.85 million bags (171,000 tons) from 2.8 million bags the previous month, the ICO said in its March report. Stocks have been rising every month since October 2016, when the current crop year started.

Stock levels are a key indicator to show how much good quality robusta is being held for wholesale shipment.

The ICO said coffee stocks in the U.S., Vietnam’s second biggest coffee buyer after Germany, reached 6.45 million bags in February, the highest level since May 2003.

Rising stocks, coupled with positive outlooks for the next crops in Brazil and Vietnam, could prompt prices to ease, the London-based ICO said.

“In combination with a positive outlook for the 2017/18 crop in Brazil and Vietnam, previous supply concerns seem to have been largely alleviated and the market lacks any strong signals to reverse from its gradual decline,” the report said.

May robusta ended up 1.26 percent last Friday at $2,170 per ton, having gained 6.2 percent since the current season started last October, based on Intercontinental Exchange data.

Ho Binh Minh, in VnExpress 11 April 2017

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