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Coffee production to rise 10% in MY2017/18

Released at: 16:57, 28/11/2017

Coffee production to rise 10% in MY2017/18

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US Department of Agriculture predicts production of about 28.6 million bags in Marketing Year 2017/18, up some 10% against 2016/17.

by Nghi Do

The US Department of Agriculture (USDA)’s Foreign Agricultural Service reports forecasts coffee production in Vietnam for Marketing Year (MY) 2017/18 at 28.6 million bags, a 10 per cent increase compared to MY2016/17 due to favorable weather in the first half of this year.

Vietnam’s coffee exports fell 22.5 per cent in the first eleven months of 2017, according to the Ministry of Agriculture and Rural Development (MARD).

November exports were 83,000 tons, worth $185 million, resulting in a fall of 22.5 per cent in volume and 3.8 per cent in value in the first eleven months of 2017 year-on-year. The decline in the domestic coffee market was based on a decline in the global Robusta price.

Vietnam’s MY2016/17 coffee production is revised down from about 26.7 million bags to 26 million bags in the report, due to unusual rain during the harvest that resulted in further losses to already lower Robusta production.

According to the MARD’s Water Resource Directorate, the wet season arrived early this year in the central highlands, Vietnam’s main coffee producing area, and will also end earlier than expected. The El Nino weather pattern could also return in the second half of calendar year 2017. If this happens, the quality of coffee cherries could be affected, as could the new crop.

The report revises estimates for Vietnam’s MY 2016/17 coffee exports upwards, including green beans, roasted and ground, and instant coffee, from 26.05 million bags to 26.55 million bags, due mainly to an expected increase in green bean coffee exports. Total exports for MY 2017/18 are forecast at about 26.65 million bags, due to limited production and carry-over stock.

Coffee Production, by Marketing Year (October-September), (green beans)

 

MY2015/16

MY2016/17 (est.)

MY2017/18 (forecast)

 

 

Old

New

Old

New

Beginning of marketing year

   October 2015

October 2016

October 2016

October 2017

October 2017

Production (thousand bags)

28,930

26,700

 26,000

 

28,600

Average yield (tons/ha)

2.62

2.42

2.36

 

2.59

Source: the US Department of Agriculture (USDA)’s Foreign Agricultural Service

Exports of green coffee beans are expected at about 24 million bags in MY 2016/17, up some 500,000 bags compared to the USDA’s estimate, due to expected increases in exports of Robusta green beans, but less than the 2.95 million bags recorded in MY 2015/16, due to limited production. MY 2017/18 green bean exports are forecast at 24 million bags, due to expected low coffee carry-over stock from MY 2016/17.

Source: General Department of Vietnam Customs

The report maintains exports of roasted coffee in MY2015/16 at 550,000 bags and exports of soluble at 2.0 million bags GBE (Green Bean Equivalent). It forecasts the same volume for MY2016/17 for roasted coffee due to the flat growth of these sectors, but an increase of 100,000 bags to 2.1 million bags for soluble coffee due to increasing investment in companies that are exporting to the Chinese market.

Vietnam continues to import small quantities of green coffee beans, as well as roasted and instant coffee, from Laos, Indonesia, Brazil, and the US. Imports of roasted/ground coffee from the US have increased in the past couple of years due to Vietnam’s expanding coffee retail sector. US brands such as Starbucks, McCafé, Dunkin Donuts, and PJ’s Coffee and several South Korean coffee brands have expanded their outlet numbers in Vietnam’s major cities.

Total coffee imports in MY 2016/17 are expected to be up from 640,000 bags to 1 million bags GBE, due to the rapid expansion of café and coffee shops in Vietnam. Of the total, about 160,000 bags GBE are soluble coffee, 340,000 bags GBE are roast and ground, and 500,000 bags are green bean imports. The report’s forecast for total coffee imports in MY 2017/18 is 1.06 million bags.

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