Vietnam coffee exporters have delayed or defaulted on shipments, traders and state media said on Tuesday, as the world's largest robusta producer grapples with tumbling prices. Buying agents in Daklak in the Central Highlands coffee belt have reportedly fled properties after prices fell to $1,212 a tonne in London last week and they could not repay farmers who had deposited coffee with them.
"In the current situation with coffee price falls, the risk of a chain default as agents run away is inevitable," the daily said in a rare report on the potential problems in the province, which produces about a third of Vietnam's total output, The provincial government-run Daklak newspaper said on Tuesday.
Vietnam produces an estimated 18 million 60-kg bags, or 1.08 million tonnes, according to a Reuters poll on January 29. Companies have delayed or defaulted on delivery of 200,000 tonnes of robusta coffee beans, or a fifth of the October 2009-September 2010 crop, after exporters and their buying agents placed ill-fated bets on a rise in futures prices, Vietnamese traders said. Shipment delays from Vietnam contributed to a $15 a tonne rise in the London robusta May contract on Monday, after the market hit contract lows just a week ago.
The industry troubles come despite a plan launched earlier this year to stockpile beans and set an export floor price to support the industry. Vietnamese coffee companies planned to stockpile 200,000 tonnes of coffee for nine months to shore up prices, an industry official said early this month. But traders contacted on Tuesday said that even though some exporters started stockpiling, there has been little impact on prices while delays and defaults are expected to worsen.
"Several major exporters are buying now under the stockpiling scheme, or to intercept a price rise the plan may cause," a trader in Ho Chi Minh City said. But traders said banks have not rolled out funds to support the plan, while exporters also hesitated as a mechanism to cover possible losses has not been made clear. However several traders said prices could get some support as a harvest in rival robusta producer Indonesia could be delayed to next month or May due to rains.
"Harvesting for the main crops has not started yet in Indonesia," said Suherman Harsono, chairman of the Indonesia Coffee Exporters Association for the Lampung growing region. "It may start in April-May. Some coffee areas in the highlands have started small harvests but the quality is not good and only for domestic consumption."
Harsono said he had not heard of any shipment delays, but said farmers may hold onto crops if prices remain low. "If coffee prices continue to fall, farmers will keep the crop from main harvest in April-May and only sell the beans when they need cash to buy basic essentials," he said.
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