Vietnam halts coffee harvest as storm approaches

28 | 11 | 2007

Typhoon rains have disrupted the peak of Vietnam’s coffee harvest, threatening to delay deliveries from the world’s top robusta producer. Vietnam is bracing for the landing of Typhoon Hagibis as it slowly crosses the South China Sea, putting at risk offshore oil production as well as the harvest in the central highland province of Dak Lak, which grows a third of the country’s coffee.

Traders estimated Vietnam's coffee output at around 20 million bags, or 17.5% of the 114 million bags the world would produce in the 2007/2008 crop year in the International Coffee Organisation's forecast.

The start of the coffee harvest has been delayed by two weeks to early this month due to prolonged rains at the end of the rainy season. Historically, storms rarely strike in late November, the usual start of a six-month dry season.

November robusta futures on euronext.liffe closed US$12 lower at US$2,309 a tonne on Thursday, or 7.5% below the contract high of US$2,495 reached on November 7, when concerns over tight supplies from Vietnam's delayed harvest boosted prices. "Farmers have to stop the harvest as rains started in the eastern districts of the province on Thursday," an official of the Dak Lak provincial disaster management committee said on Friday November 23. Dak Lak is the country's largest coffee-growing area. He said the districts have yet to report any crop damage from the rains, which would also disrupt outdoor drying of picked coffee cherries.

On Friday November 23, light rains continued in Buon Ma Thuot city and nearby areas, another official in Dak Lak said. Traders said farmers would have to replace outdoor drying by using heaters, one factor that could lift production costs along with a nationwide fuel price hike on Thursday.

The government said the cost to produce rice or coffee could grow up to 1.51% after Hanoi raised retail prices of petrol and diesel by 15-18.6% to help cut losses by state-run oil product import firms.

Dak Lak is forecast to produce 6.7 million 60-kilogram bags of robusta beans from the current harvest. Prices for robusta beans stood at 26,500-26,600 dong (US$1.65) per kilogram on Friday November 23 in Dak Lak, but sales were slow.

At 1 p.m. (0600 GMT) on Friday November 23, Typhoon Hagibis centred 200 kilometres (124 miles) east of Vietnam's central coast, with winds blowing at more than 133 kilometres (83 miles) per hour, forecasters said.

Heavy rains were expected from late Friday November 23 in central coastal provinces bordering the Central Highlands coffee belt, they said. Hagibis, meaning 'rapidity' in the Philippines Tagalog language, could change course while zooming in towards the central province of Khanh Hoa, forecasters said.

The government urged coastal provinces on Friday November 23 to prepare to evacuate nearly 180,000 people. "Measures must be taken to ensure the safety of reservoirs for hydro-power plants, oil rigs," a government report said.

Important oilfields such as Bach Ho lie in the path of the storm, which could disrupt oil and gas production off Vietnam, Southeast Asia's third-largest producer of crude oil. The storm triggered landslides that killed 13 people in the Philippines before entering the South China Sea on Wednesday.

Source: Intellasia.net

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