Vietnam, the world's largest robusta coffee producer, is looking for buyers with supplies expected to remain ample until the next harvest starts in late October, dealers said on Monday. In second-largest producer Indonesia, the crop should peak in July in the main growing island of Sumatra, which may force exporters to widen the discount of beans to London futures.
"We've seen that 35 percent of the crop is already out in Sumatra. The flow is quite fast so perhaps the harvest will last for another two months," said a dealer in Singapore. "The thing is that this is a tough period for sales. It's summer and there's very little activity among roasters right now. Everybody is packing to go on holidays. Roasters may start buying again in the second half of August," he said.
Dealers said Vietnam still had around 200,000 tonnes of beans, meaning the country could ship out around 50,000 tonnes each month from July to October to clear stocks. "Vietnam still has coffee in stock but demand is thin," said a dealer at a foreign firm in Ho Chi Minh City.
Despite ample supplies, exporters cut discounts to London futures to offset declines in September contract following a spike to $2,454 a tonne on Friday, the highest level for the second month since March 20. Discounts narrowed to $154-180 a tonne from $160-210 late last week, meaning Vietnamese robusta grade 2, 5 percent black and broken beans would be worth $2,240-2,270 a tonne, free-on-board basis, from $2,176-2,226 a tonne last week.
Dealers forecast Vietnam would harvest a bumper crop in the Central Highlands due to sufficient water supply and higher prices that encouraged farmers to take more care of their trees.
Domestic prices have risen about 30 percent in the past year. The US Department of Agriculture has forecast Vietnam's 2008/09 crop to rise 23 percent to 21.5 million bags. Indonesia's export grade robusta grade 4, maximum 80 defect was offered at a discount of $130 to $140 a tonne under London, unchanged from last week.
"Discounts will widen when the harvests peak next month and more beans come in," said a dealer in Bandar Lampung, the provincial capital of Lampung in Sumatra. "Farmers will release more beans because they need cash ahead of the new school term," said the dealer, adding that more than 100,000 tonnes of beans had been delivered to Bandar Lampung from plantations from April to June.
In smaller producer India, up to 80 percent of beans from the recent harvest was already sold, dealers said. "Export demand from Europe is coming down. They are getting other origin coffees at much cheaper prices. Coffees from Columbia and Ethiopia are $75-100 cheaper than Indian varieties." said Venkat Krishnan, General Manager at General Commodities Ltd.
"It's going to be difficult once the Brazil coffee hit the market. The peak season is over for Indian exporters, which is from December-June. In July and August there will be some shipments but September onwards it will be a dull season till the new crop comes to the market," he said.
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