Bareksa.com - Vietnam will see significantly lower rainfall and water shortages later this year in the Central Highlands area due to a likely El Nino weather event, a government report said, raising the prospect output from the 2015/16 coffee crop will shrink.

The Southeast nation is the world's largest robusta producer, accounting for nearly a fifth of global coffee output.

Any drops in output from Vietnam or No.2 robusta producer Indonesia could push up global prices of the bitter beans used for making soluble coffee.

"Daklak, Dak Nong and some districts in Gia Lai will face water shortages and dryness in the 2014-2015 dry season," Vietnam's Natural Resources and Environment Ministry said in a report seen on Thursday, its first forecast of El Nino's impact.

The report, posted on its web site (www.monre.gov.vn), referred to the top coffee growing areas in the five-province Central Highlands, which produce 80 percent of Vietnam's output.

Rainfall later this year would drop significantly, waters in Central Highlands' rivers could be 10-30 percent lower than before between July and September, and water supply from rivers and streams will fall quickly from November, the report said.

It gave no forecasts of potential damages on any crops, including rice in the Mekong Delta food basket. Vietnam is the world's second-largest exporter of the grain after India.

The six-month dry season begins from October in the Central Highlands region while the coffee crop year lasts between October and September, starting with a four-month harvest.

El Nino - a warming of sea temperatures in the Pacific - affects wind patterns and can trigger both floods and drought around the globe, hitting crops and food supply.

The chance of an El Nino weather event developing this year remains at least 70 percent, the Australian Bureau of Meteorology said this week.

This year El Nino could damage maize, rice and wheat yields, according to a Japanese-led report published last month.

Water shortages during the coffee blossom period between February and April can ruin flowers and reduce bean size.

"El Nino can be good for the 2014/2015 harvest as dry weather helps the drying process and bean quality will be better, but the next 2015/2016 crop could be hit," said a Vietnamese trader in the central highland province of Lam Dong.

"Robusta futures are expected to find support in the emerging El Nino, which is likely to bring warmer than normal conditions to the key production regions of Vietnam and Indonesia, while potentially bringing rainfall to Brazilian crops," Rabobank said in its latest monthly report.

Vietnam's 2014/15 coffee output is estimated at 29.2 million 60-kg bags, up from about 29 million bags - already a record - in the current 2013/14, according to a U.S. Department of Agriculture attache report. (Source : Reuters)