Vietnam, which is the biggest Robusta exporter in the world, is now considering importing materials for re-export.
At this moment, the storehouses of Vietnamese coffee exporters are all empty. They have exported all the coffee products they had after signing a lot of contracts when the harvest ended. They wish they had not exported all the products, because they would reap more if they exported at this moment, when the price is escalating.
Right at the end of 2006, Chairman of the Vietnam Coffee and Cocoa Association (Vicofa) advised its member companies not to export coffee in large quantities and not to sign contracts with the delivery time too far from the contract signing time, in order to avoid possible risks due to price fluctuations. Vicofa anticipated that the coffee output would decrease this year, while the demand would be increasingly high.
Vietnam is the nation with the biggest Robusta growing area, 500,000 ha, which can provide the yield of 750-800,000 tonnes. Most of Vietnam’s coffee has been exported as raw material, which cannot bring high profit. Now, with the world’s price increasing, Vietnam has no more coffee to sell.
Since 2002, the Robusta price has tripled in the world, and is now staying at the highest peak since 1998. The coffee price has increased sharply due to decreased supplies from the biggest producers, who have lower output as a result of bad weather, while the demand is increasing sharply in Europe.
Analysts said that in general, the price would keep rising because the supply remains short.
As their stocks have run out, Vietnamese enterprises are now thinking of importing coffee material, and if they do that, they will have to buy coffee at a high price (as the world’s price is increasing).
The International Coffee Organisation (ICO) said that the world’s coffee output for the 2007/2008 crop would be 6-8mil bags (60kg/bag) lower than the consumption level, surely making the price increase further.
Meanwhile, the Robusta output of Vietnam in 2007/2008 is expected to increase by 30%, or 780-950,000 tonnes, as the coffee plant has recovered from the drought eight years ago.
According to Vicofa, in order to take full advantage of being the leading Robusta exporter, a lot of things still need to be done, including developing the material area, expanding trade and the drawing up of a market strategy.
Vicofa said that it was very necessary to have coffee in reserve. Brazil, for example, the leading coffee producer, buys coffee for reserve every year to sell when the price is high.
Source: VNE
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