Farmers in southern Sumatra, Indonesia's key source for coffee, are holding stocks as coffee futures retreated from nine-year highs, but prices fell on a stronger rupiah against the US dollar. Coffee bean supplies from plantations to Panning port in Lumping province averaged 500 to 700 tonnes a day this week, from around 1,000 to 1,200 tonnes two weeks ago.
"Farmers released their stocks when prices were high in the past weeks. They still have cash, so they are holding their stocks for now," said a dealer in Bandar Lampung, the provincial capital of Lampung province in Sumatra. "They may release their stock again next week to get cash before the Muslim Eid-ul-Fitr holidays," the dealer said.
Indonesia, the world's most populous Muslim country, is observing the fasting month of Ramazan, which will run to the Eid-ul-Fitr holidays in the middle of October. Despite tightening supplies, prices of Indonesia's robust beans eased this week to around 14,800-15,500 rupiah ($1.62-$1.70) a kilogram from 15,750-16,000 rupiah a kilogram two weeks ago as London coffee futures retreated from nine-year highs.
The benchmark November contract ended up $30 at $1,891 per tonne on Thursday, but it was off nine-year highs hit on September 18 at $2,026 a tonne. Gains in the Indonesian rupiah against the US dollar also put pressure on prices in the past weeks. The Indonesian rupiah moved in a tight range between 9,125 and 9,138 per dollar in trade on Friday, strengthening from 9,380 per dollar two weeks ago.
A stronger rupiah against the dollar makes the commodity traded in dollars cheaper in local currency terms. Trading in Lampung was slow as merchants and exporters could not agree on prices. Exporters want to buy coffee at cheaper prices but merchants won't budge.
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