Indonesian coffee premiums slipped to their lowest since early March this week as more beans entered the physical market ahead of the peak of the harvest, spurring renewed buying interest from foreign roasters, dealers said on Thursday. Premiums for Sumatran grade 4, 80 defect beans fell to $40 to $50 a tonne to London's July contract from as high as $140 last week. A rally in London also weighed on premiums in Indonesia, the world's second-largest robusta producer after Vietnam.
"You've started to see the crop flowing in, that's why we are seeing better premiums. Local roasters as well as international trading houses are buying," said a dealer in Singapore who trades Indonesian and Vietnamese beans. The harvest in the main growing island of Sumatra started at the end of January and may peak in June, but premiums for the new crop reached a high of $250 because of strong demand from local roasters and a lack of carryover stocks from last year's harvest. Old-crop beans premiums hit a high of $400 in March. Heavy rains damaged the previous crop in 2011, causing a severe supply shortage that sent premiums to record highs of $550 last August.
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