Asia Coffee: Vietnam quiet despite recovery in global prices; Indonesia premiums tighten

By Reuters   October 4, 2018 | 07:06 pm PT
Global coffee prices recovered but markets were subdued in Vietnam and Indonesia due to low stocks in both the countries, traders said.

In Indonesia’s Lampung province, exporters quoted premiums for the grade 4 defect 80 robusta at $25 to $30 premium a ton to London’s November and December contracts, down from last week’s $50 premium, a trader said.

Another trader quoted the beans at $70 premiums to November and January contracts.

“Market prices rose in the past week, we have to cut premiums,” one of the traders said, adding that only a few transactions took place this week due to weaker demand and low stock after Indonesia’s main harvest ended last month.

Indonesia coffee exports from the province of Lampung in Sumatra in September plunged 51 percent from the same month last year to 10,058 tons, official data showed, with lower production this year and higher domestic demand contributed to the drop in exports.

“Global buyers have shifted to Vietnam because its cheaper there,” the trader added.

In Vietnam, exporters have started offering beans from the upcoming harvest since stocks from the past crop were running low, while farmers are still not satisfied with the price despite a recovery in global prices, traders said.

Farmers in the Central Highlands, Vietnam’s largest coffee growing area, offered coffee at VND34,000-34,400 ($1.46-$1.47) per kg, up from VND32,600-32,800 last week, but still below a 6-year-high level of more than VND47,000 hit last year.

“The green bean (prices) are too low and the cost is increasing. (In) some countries, the running cost is even higher than the price,” said Luong Van Tu, chairman of the Vietnam Coffee and Cocoa Association.

Regardless, Vietnam in the 2017/2018 crop exported an estimated 1.8 million tons of coffee, up 12.95 percent from the previous crop, while January-September exports grew 19.6 percent annually to 1.46 million tons, government data showed.

Exporters offered Vietnam’s 5-percent black and broken grade 2 robusta at $30-$40 discount per ton to London’s November and January contracts, same as last week, but importers asked for a larger discount of $50, traders said.

Extended rains in Vietnam’s coffee growing region have raised concerns about the quality and timing of the upcoming harvest, which could start as early as next month.

Scattered showers are expected over the next week in the Central Highlands region, the National Centre for Hydro-Meteorological Forecasting agency said on its website.

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