Vietnam coffee prices rise

Domestic coffee prices in Vietnam have risen and exporters also narrowed their discount offers to London prices, citing falling stocks, traders said on Tuesday. Vietnam may have exported 16.93 million bags of coffee or more between last October and this month, based on customs and government data as well as traders' estimates. That would be about 85 percent of its 2020/2011 harvest.
With 15 percent of the harvest left in the country in the hands of exporters, foreign companies and a small number of wealthy farmers, sales have slowed in recent weeks despite high prices. "There's not much coffee left, so (export) companies have to raise their buying prices," a trader at a foreign company in Ho Chi Minh City. Domestic prices stood in a wide range depending on the position of exporters, he said.
Robusta beans stood at between 49,800 and 50,300 dong ($2.42-$2.44) per kg in the Central Highlands coffee belt, up from 48,000-48,400 last week. "People who have bought coffee at high prices on domestic markets have slowed their sales, and farmers are also holding back," the trader said. Robusta coffee prices in Vietnam this week, still below a record of 51,900 dong per kg reached on May 11, have risen around 35 percent from the end of 2010, while export quotations have also risen around 34 percent in the period.
DISCOUNTS NARROWED: Discounts to London's July contract narrowed to $30-$40 a tonne this week from $60-$70 last Tuesday and $80-$90 a tonne two weeks ago, placing robusta grade 2, 5 percent black and broken at $2,500-$2,510 a tonne, free-on-board basis.
Some exporters have even offered the regular export grade on par with London's July contract, another trader said. Traders said several Vietnamese exporters, including major firms, have delayed loading a small volume of coffee from January because they saw domestic and export prices have increased. "In the near term, Vietnamese coffee prices would stay high due to thin stocks," the first trader said.
"After Tet, companies have been more careful in signing deals, so the delayed volume is only under old contracts," he said, referring to the Lunar New Year festival that fell in early February. On the production side, the rainy season has arrived in the Central Highlands, reducing growers' need for cash to buy fuel for watering trees, another factor prompting farmers to hold on to their stocks and slow sales.
Vietnam's next coffee harvest is due to start in late October and peaks from late November or early December. Offshore traders have forecast the next 2011/2012 harvest to pick between 22 million and 24 million bags, from 20-22 million bags in the current 2010/2011 season. The coffee crop year in Vietnam, the world's second-largest producer after Brazil, lasts between October and September.