Vietnam's domestic coffee prices climbed 0.7 percent on Friday to their highest levels in nearly a month, traders said, tracking global coffee prices that are spiralling upwards because of fears a Brazilian drought will hit supply. Domestic robusta prices rose to 41,500-41,900 dong ($1.97-$1.99) per kg, on par with those on March 13, based on Reuters data. The rise tracked a gain in London's futures market, where the July contract ended up 1.2 percent at $2,158 per tonne on Thursday.
The increase did not boost domestic trading, however, as farmers had sold actively earlier in the week when global prices posted sharper gains, and were waiting for a further rise in domestic prices. But prices in Vietnam, the world's top robusta producer, could soon fall because a government crackdown on overloaded trucks this month has caused transportation costs to jump, traders at foreign firms in Ho Chi Minh City said.
Exporters, in order to keep their selling prices stable, will have to cut the domestic buying prices when transport costs are up. "Coffee prices will have to be lower soon as truck companies are asking to double the cost for coffee delivery to Ho Chi Minh City, and exporters will have to pass on the increase to domestic prices," a trader said.
The nationwide crackdown was launched on April 1 by the Transport Ministry-run Directorate for Roads of Vietnam, with inspectors checking the weight of all trucks to prevent overloading, accidents and to help maintain road quality. The campaign has so far been affecting rice sales to China from Vietnam, the world's second-largest exporter of the grain, causing a pile-up in supplies at a northern port and softer prices.
The transportation of robusta beans to Ho Chi Minh City from the Central Highlands coffee belt has started facing minor delays, traders said. Trucks used to carry 40 tonnes of coffee each now have to halve the load to qualify for road movement. "Trucks are lining up in a long queue near checkpoints on the way out of Lam Dong, waiting to have the total loading weight inspected," a second trader said, referring to the second-biggest coffee growing province after Daklak.
The problems have so far not caused any delays in loading at Ho Chi Minh City's Saigon Port, the country's biggest port, because exporters have beans in stock at warehouses in the city, traders said. Vietnam's coffee exports this month are forecast to ease to 150,000-180,000 tonnes (2.5-3.0 million 60-kg bags), after March's shipment jumped to an estimated 220,000 tonnes following the holiday-shortened February, traders have said.
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