Indonesian robustas changed hands at their highest premiums since January for prompt shipment after roasters rushed to cover stocks as heavy rains disrupted delivery from plantations, dealers said on Thursday. Despite the slow arrivals, output in the world's second-largest robusta producer after Vietnam is expected to rise more than 30 percent in the current year to September 2013, according to the International Coffee Organisation.
Sumatran grade 4, 80 defect beans were traded at $120 premiums to London's July contract, their highest since January. Beans in rival Vietnam fetched smaller premiums. "People are trying to cover their shorts. They have to buy at high prices. The weather is not very good in Sumatra right now. It's raining again," said a dealer in Singapore, who trades Indonesian and Vietnamese beans. Although late arrivals from plantations during the current harvest in the main growing island of Sumatra have raised fears output could miss expectations, the crop is expected to pick up later in May and throughout June.
Heavy rain damaged the crop in the 2011/12 season, causing a severe supply shortage that drove premiums to all-time highs of $550. Sumatran beans normally sell at, or slightly below, London futures, whenever the harvest peaks. "Indonesia will have a huge crop this year but it's not coming up yet. I think it's due to weather. The harvest hasn't progressed as fast as we had expected," said another dealer in Singapore.
"Daily arrivals are around 1,000 tonnes after reaching 2,500 at one point last Thursday. During the peak, arrivals should reach at least 3,000 tonnes," the dealer said. Coffee output is likely to see a modest increase in the next crop year to September 2014, but strong domestic demand will boost consumption by nearly a third to more than 4 million 60-kg bags, a Reuters survey showed on Tuesday.
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