Vietnam Coffee-Buyers Switch to Cheaper Indonesian Beans

By webadmin on 05:16 pm Jun 12, 2012
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Ho Binh Minh

Hanoi. Thin coffee stocks in Vietnam have been keeping prices high, making it difficult for exporters to secure beans for fresh deals, while foreign buyers have already switched to taking beans from Indonesia’s peaking harvest, traders said on Tuesday.

The harvest in Vietnam, the world’s largest robusta exporter, ended in January and farmers have sold most of their stocks. They often hold back the remaining beans before the start of the next harvest.

“Farmers are keeping only 10-15 percent of their crop now and want to sell only if prices hit 50,000 dong per kg,” a trader at a foreign company in Ho Chi Minh City said. “Exporters do not sell much either because they cannot buy easily from domestic markets.”

Robusta harvest in rival producer Indonesia that started in January is now at its peak, keeping prices lower and supply plentiful, traders said.

“Vietnamese prices are more expensive than in Indonesia so buyers have switched to buying from there,” another trader in Ho Chi Minh City said. Vietnam’s next harvest will begin in late October or November.

Vietnam and Indonesia turn out nearly a fifth of the global coffee output.     

Robusta prices fell around 2 percent to 41,300-41,500 dong ($1,975-$1,985) per kg on Tuesday in Daklak, Vietnam’s key producing province, down from 42,200-42,500 dong a week ago.
 
Bids were at discounts of $20-$30 a ton to London’s September contract, narrowing from $40 last Tuesday, while some exporters offered to sell on par or at premiums of $10-$20 a ton to the September contract, which closed at $2,071 a ton on Monday. 

Such quotations put Vietnamese robusta grade 2, 5 percent black and broken in a wide range of between $2,040 and $2,091 a ton, free-on-board basis, below $2,100 last Tuesday. Indonesian robusta grade 4, 80 defect beans were offered at discounts of $10 to on par with the September contract late last week. 

With thinning stocks in Vietnam, the country’s monthly loading was expected to fall to 100,000-110,000 tons in June, from an estimated 150,000 tons shipped last month, traders said. 

Exports between October 2011 and this month would therefore total at least 1.2 million bags, or 20 million 60-kg bags, up nearly 9 percent from the previous season, based on government data and traders’ June estimates. Vietnam would still have at least 2.5 million bags left, based on traders’ output estimates for the current 2011/2012 crop of 22.5 million bags. The coffee crop year lasts from October to September.     

Reuters