Premiums of Vietnamese coffee to London futures prices held steady on Tuesday at their highest in nearly two years as farmers clung to stocks hoping for higher global prices and better returns. Traders said they expected shipments this month from Vietnam, the world's biggest producer and exporter of robusta, to be lower than June's export volumes, where were already down more than a third from a year ago.
Premiums for Vietnamese robusta to London's September contract held at $100-$130 a tonne, the level recorded last week when rain disrupted deliveries from Indonesian plantations and as farmers held back beans while futures prices continued to climb from a near three-year low hit on June 14. Liffe September robusta coffee futures rose to their highest level in about five weeks on Tuesday at $1,922 a tonne, as rains prevented farmers from fully drying beans.
"Farmers have to pay interest for loans taken out since the last crops. They're expecting a higher price which will help them not only cover that interest, but also make profit," said a trader in Ho Chi Minh city. Vietnam Prime Minister Nguyen Tan Dung last week gave approval for banks - already saddled with high bad debt - to extend the lending period for coffee export companies from a year to three years, giving them time to repay debts accrued following the steep fall in coffee prices.
There are doubts, however, as to whether all companies would meet requirements to qualify for an extension. "This regulation is only aimed at helping the state-owned companies," one trader said. On domestic markets, robusta rose to 40,200-40,600 dong ($1.89-$1.91) per kg on Tuesday in Daklak, Vietnam's top growing province, from 38,400-39,100 dong a week ago.
Traders slashed their forecasts of coffee exports in July to 70,000-80,000 tonnes (1.17 million to 1.33 million bags,) below the shipment volume in June. June shipments stood at 88,000 tonnes, a 37-percent drop from the same month last year, according to official data released on Tuesday. World coffee production would rise 7.8 percent to 144.6 million bags in 2012/13, taking it above consumption estimated at 142 million bags, the International Coffee Organisation said last week.
Comments
Comments are closed.