Vietnam's harvest season is expected to commence by mid-November with output seen exceeding the previous crop, while trading was lacklustre this week in both Vietnam and Indonesia, traders said on Thursday. Farmers in Vietnam, the world's biggest robusta producer, are expected to kick-start their main harvest season in mid-November as recent crop-friendly rains kept beans from growing ripe and ready for picking, coffee traders said.
Traders expect output of the 2017/2018 period to return to average levels after a fall in production in the previous harvest due to unfavourable weather conditions in December. Vietnam's coffee production is seen hitting a fresh record high in the 2017/2018 period, but rainfall will delay the harvest, said Judith Ganes, president of Panama-based JGanes Consulting.
Coffee output in Brazil, the world's top producer of the beans, could also reach a fresh peak in the period, but prices are unlikely to sink as stocks in producing countries have been low in the past years due to adverse weather, Ganes told a plantation conference in Jakarta on Thursday. "We also have to pay attention to a rise in domestic consumption in Vietnam," said Le Duc Huy, deputy general director of Simexco, a leading exporter in Daklak, the country's largest coffee growing province.
"There are a handful of instant coffee plants that have been or are about to expand or open, contributing to an increase in domestic demand; the small-sized roasters are doing pretty well, while many coffee chains and startups are popping up," Huy said. Farmers in Daklak are offering beans at 42,000-43,000 dong ($1.85-$1.89) per kg, lower than last week's 43,400-43,500 dong, traders said.
Traders quoted the 5 percent black and broken grade 2 robusta at a discount of $50-$70 to the London ICE January futures, but trade was dull on low stock before harvest and weak foreign demand, traders said. Price of Indonesia's grade 4 defect 80 robusta beans in main growing area of Lampung stood at $40 premium to January contract, said a trader in Bandar Lampung, compared to a premium of $20-$30 to the November contract last week.
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