Vietnam’s looming coffee shortage threatens to send global prices soaring
- Output from the world’s second-largest coffee producer is expected to drop next year, amid dwindling stockpiles and a poor harvest outlook
- Local traders say they are worried about a looming shortage, as the global coffee market faces one of its biggest deficits in recent memory
Stockpiles will halve by the end of September from a year earlier, according to the median estimate in a survey of traders. Output from Vietnam, the world’s largest robusta supplier and second-largest coffee producer, is also expected to drop in 2022-23.
Robusta, used by instant coffee makers including Nestle SA or as a blend in espressos, has been making a comeback. The variety, normally cheaper than arabica, is in strong demand as people look for alternatives to mitigate the impact of rising inflation.
Bean availability in Vietnam has fallen as shipments rose 17 per cent to 1.15 million tonnes in January-July from a year earlier, according to customs data. The increase in exports has been aided by an improving supply of containers and ships, but may be difficult to sustain given the shrinking stockpiles.
“We are worried” about a shortage through early November, said Phan Hung Anh, chief executive of Quang Minh Coffee Trading JSC in the southern province of Binh Duong. Local growers are probably holding only around 2 per cent of their annual output, compared with about 13 per cent a year earlier, he said.
The global coffee market is facing one of the biggest deficits in recent memory after drought and frost slashed Brazilian output. Colombia is struggling to recover from crop-damaging rains, while Honduras, Guatemala and Nicaragua are running out of supplies from the 2021-22 harvest. Costa Rica’s next-season crop is showing signs of stress, and a drought has cut robusta yields in Uganda.