Coffee prices in Vietnam edged up on Tuesday but were still lingering at seven-month lows and traders said prices may get a boost from a delay in harvesting due to the storms forecast to hit the country from October until the end of the year. Robusta beans rose to 43.6 million and 43.7 million dong ($2,096-$2,100) per tonne in Daklak, Vietnam's largest coffee growing province, from 43.3-43.5 million dong on Monday.
This week's prices, despite a slight rise on Tuesday following Monday gains in the London futures market, are the lowest in dong terms since the week ended February 25, when a tonne of coffee beans hit 42.8 million dong, based on Reuters data. "Prices at the start of the crop are expected to remain good for growers," a trader at a foreign firm in Ho Chi Minh City said but gave no specific value forecasts. Tuesday's prices have risen nearly 50 percent from an average 29.4 million dong a tonne for the first week of October 2010, the start of Vietnam's 2010/2011 coffee season. Vietnam devalued the dong by 8.5 percent on February 11.
"People have not sold much of the new crop and the external demand is also thin thanks to sufficient stocks, while buyers in short could take beans from foreign firms' bonded warehouses to avoid risks," another trader in Ho Chi Minh City said. He said there were no offer prices on Tuesday, while the last indicative offer was a $70-per-tonne discount to London's January contract, and exporters wanted the gap to narrow to $40-$50 a tonne.
Indicative prices for robusta grade 2, 5 percent black and broken now stood at $2,058 a tonne, free-on-board, from $2,056-$2,076 last Tuesday. Exporters sold quickly this year to get good prices, but many later failed to buy beans locally for loading as domestic prices rose beyond export prices, one of the reasons behind delays and defaults of up to 100,000 tonnes. "We are not selling much now, because there might be a risk with buying beans locally later," an exporter based in Buon Ma Thuot, the capital of Daklak, said by telephone.
He said he has sold so far 2,000 tonnes of the 2011/2012 coffee, from up to 7,000 tonnes sold at the same time last year. Bean purchase could be risky in November as several exporters have won agreement from buyers to ship their delayed beans in November/December, while the weather outlook is uncertain, the exporter said.
Last month farmers in Daklak said the harvest could start in October, a month earlier than usual. "It now looks like it can begin one to two weeks earlier, but there will still be rain coming," the Daklak exporter said. National carrier Vietnam Airlines said it will cancel eight domestic flights on Tuesday to destinations in the central region, including the Central Highlands, due to a tropical storm, the fourth to hit Vietnam this year. Two or three more storms are forecast to come between now and the year end, Deputy Director Le Thanh Hai of the National Centre for Hydro and Meteorology Forecasts said.
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