Vietnam’s coffee output in 2010- 2011 may decline because of inadequate rainfall, agricultural officials and growers said.

“There are visible signs of a drought this year,” Huynh Quoc Thich, the head of the cultivation office in Dak Lak’s agricultural department, said by telephone today. “If the dry weather is prolonged, output will definitely be cut.” He didn’t provide a forecast.

Dry weather caused by El Nino has raised concerns this year that rice crops in the Philippines and Thailand and palm oil in Malaysia and Indonesia may be reduced, spurring food inflation. A smaller coffee crop in Vietnam, the top grower of robusta, may support prices that are at a three-month high.

Futures for May delivery rose 2.4 percent to $1,371 a ton in London, the highest closing since Dec. 16. Prices have risen about 7 percent this month.

Vietnam exported 330,000 tons in the first three months, 23 percent less from a year earlier, data from Hanoi-based General Statistics Office show. Output in 2009-2010 may be 30 percent less than 1.16 million tons in the previous year, the country’s coffee and cocoa association said in January.

Rainfall in Buon Ma Thuot, capital of Dak Lak, totaled 0.4 millimeter in the first 20 days of this month, less than half the amount from the year-ago period, according to data from the Dak Lak Hydrology and Meteorology Office. Dak Lak is Vietnam’s main coffee-growing region.

“We’ve had almost no rain in the past few weeks,” Thich said. “It’s the fruiting period and trees need water.”

Financial Aid

Local authorities have sought financial assistance from the central government to help growers struggling with higher water and fertilizer costs, Thich said.

Farmers are spending between 2.2 million dong ($115.3) to 2.5 million dong per hectare to water trees, said Nguyen Xuan Thai, director at Thang Loi Coffee Co., the country’s largest grower. Fertilizer prices have risen 10 percent, he said.

“Additionally, the dry weather has caused insect infection to spread, causing growers to use more insecticides,” Thai said.

The drought in southwest China, which may have been caused by El Nino, has spread southward into Southeast Asia. The Mekong River, which flows from China through five countries including Cambodia, is at its lowest level in three decades, Thailand’s Department of Water Resources said March 10.

Rice production may drop and the price may jump because of the dry weather, Thai Prime Minister Abhisit Vejjajiva said March 2. Palm oil output in Malaysia, the second-largest grower, may decline 2 percent to 3 percent this year on the El Nino, the Malaysian Estate Owners Association said March 19.

El Nino, which reduces rainfall in Asia, is caused by a warming of the equatorial Pacific Ocean. The current El Nino is weakening after peaking in December, Philippine Senior Weather Bureau Specialist Daisy Ortega said on March 24.

(Source:Bloomberg)