Rumours of bumper crop sink coffee prices

The association's chairman, Van Thanh Huy, said the global coffee bean prices were unstable because of variable weather conditions this month in Brazil, the world's leading coffee producer, and that speculation on supplies had sent ripples through the market.

Brazil and Viet Nam - the number two coffee producer - anticipate a bumper harvest in the 2006-2007 crop of 40 million and 13.8 million bags, respectively, which has already impacted market prices.

However, the association said fluctuation on international markets had not yet affected most coffee growers and traders in Viet Nam, where just 40,000 tonnes of coffee remain in stock. Earlier stockpiles were sold out last month when prices sat at around $1,216 per tonne, it said.

Market pressures have put some merchants in the Tay Nguyen (Central Highlands) province of Dac Lac in difficulty, with companies that conduct trading online reporting substantial losses. The Vicofa chairman attributed the losses to a lack of experience in modern trading floors and poor financial backing.

The province is now calling on investors from all economic sectors to invest in the establishment of four new coffee processing plants in key growing areas in Krong Pach, Krong Ana, Krong Buk districts and Buon Me Thuot City, each with an annual production capacity of 5,000 tonnes.

Buon Me Thuot City is already home to a dozen coffee producers, including well-know companies like Trung Nguyen, An Thai, Thanh Bao and Buon Me Gout.

Dac Lac Province now has 166,000 hectares of coffee under cultivation, supplying roughly 300,000 tonnes of beans each year, said the association.