Production will climb to 1.8 million metric tons in the year beginning October assuming normal weather, according to the median estimate of 15 traders and analysts surveyed by Bloomberg. That compares with 1.79 million in a survey last month and a forecast Tuesday from the nation's agriculture ministry that output will exceed 1.8 million tons.

"I would say 1.8 million tons is a record high ever for a Vietnamese coffee crop," said Le Tien Hung, general director of Simexco Dak Lak, the nation's second-largest coffee exporter by volume. Favorable rains and plantings of new high-yielding varieties in multiple farms in Vietnam's "coffee capital" of Dak Lak helps explain the higher output, according to Mr Hung, whose company ships about 100,000 tons of coffee per year.

Record production would further weigh on robusta prices, which have fallen 22 per cent over the past year. Higher output in Brazil and Vietnam will boost the global coffee surplus to 6.6 million bags, or 396,000 tons, in the 2018-19 season following a balanced market this season, according to Sucden Financial Ltd. Vietnam's crop will be 1.75 million tons this season, up about 17 per cent from 1.5 million in 2016-17, the Bloomberg survey shows.

Production in the four provinces of the Central Highlands region, which accounts for more than 90 per cent of Vietnam's output, will climb more than 4 per cent in 2018-19, according to the median estimate in a separate survey of provincial agriculture departments in Dak Lak, Gia Lai, Lam Dong and Dak Nong. SEE ALSO: Ascott opens 2 Citadines serviced residences in Vietnam, including its biggest property globally

Lam Dong, which represents 24 per cent of Vietnam's coffee area, is expecting a record crop of 477,000 tons next season, up from 454,000 tons this year, according to Nguyen Van Son, director of the provincial department of agriculture and rural development.

Yields at replanted farms will average 3.25 tons a hectare compared with 2.59 tons in non-replanted areas, according to the survey. The four provinces have replanted coffee trees on more than 85,000 hectares through end-July, equal to 71 per cent of the target of 120,000 hectares set for the Central Highlands by 2020.

More than 64,000 hectares still need to be replanted, according to the survey.

While domestic prices have remained low almost since the start of the current cropping year, the amount stockpiled by growers is in-line with a year ago and the five-year average, according to the trader survey. Farmers probably sold 1.58 million tons by end-July based on the estimated output of 1.75 million tons, or 90 per cent of the 2017-18 crop.

Stocks in warehouses and mills around Ho Chi Minh City are estimated at 223,500 tons as of July 31, according to the median of 10 survey respondents. That compares with 299,000 tons a year earlier and the five-year average of 265,000 tons.

Shipments probably rose to 1.17 million tons in the first seven months of the year, 12 per cent more than the same period in 2017, the General Statistics Office estimates.

The Central Highlands is expected to receive normal rain through September, according to the National Center for Hydro-Meteorological Forecasting. Precipitation in the fourth quarter, when bean collection normally occurs, is forecast to be 15 to 30 per cent below average.

The upcoming crop is "developing well" with the harvest expected to start in early November, RCMA Asia Pte said in a report last month. The company raised its forecast for the 2018-19 season to 1.92 million tons from 1.83 million to 1.86 million tons.

Bloomberg - August 1st, 2018