Coffee prices in Vietnam rose this week while stocks dwindled and exporters have started offering fresh beans at a discount to London futures prices before the new season starts in October, traders said on Tuesday.
Thin supplies and fund buying lifted arabica prices in New York to their highest in more than three months on Monday while the London futures market was closed for a holiday.
In Vietnam, robusta beans ranged between 49,500 dong and 50,400 dong ($2.38-$2.42) per kilogram on Tuesday in the key growing province of Dak Lak, versus 49,800 to 50,000 dong a week ago. The early harvest has been under way in several southern provinces outside the Central Highlands coffee belt, where harvesting is expected to start in October, a month earlier than usual.
Coffee prices in Vietnam, the world’s largest producer and exporter of the robusta variety, have stayed above London’s futures prices in the past several months, making it hard for exporters to secure beans for loading. Traders have estimated that at least 70,000 tonnes had faced delays. Discounts narrowed to $50-$60 a tonne to January’s contract from $50-$70 last Tuesday, but buyers have not been interested as they focused more on nearby terms, traders said.
Vietnamese robusta grade 2, 5 percent black and broken beans stood this week at a premium of $100 a tonne to London’s November for outright shipment, or $2,462 a tonne, free-on-board, from $2,345-$2,435 last Tuesday. Last week buyers bid premiums of $40-$50 a tonne, on par with the November contract, which closed steady at $2,362 per tonne last Friday. The London market was closed on Monday while arabica coffee futures in New York soared to a 3-1/2 month top on tight supplies and fund buying.
Last week the government estimated August coffee export at 40,000 tonnes, or 670,000 bags, down 48.6 percent from the same month last year, which took shipments between October 2010 and August to 20.8 million 60-kilogram bags. Vietnam’s coffee crop year lasts from October to September.
Based on the loading estimate – well below market expectation of 65,000 to 70,000 tonnes for August – and a crop output of 22 million bags, the stock left in the country would be around 1 million bags. The stock left is on par with what Vietnam carried forward to the 2010/2011 crop, while now exporters still have another month to go for loading.