Sales of fresh Vietnamese coffee beans are picking up as the harvest is accelerating in the world's largest robusta producer and prices have improved in line with global market gains, traders said on Thursday. Up to 15 percent of Vietnam's 2014/2015 crop has been harvested, and more will arrive later this month, while supply has slowed in Indonesia, Vietnam's robusta rival. The two produce a combined 25 percent of global output.
"It's much easier to buy now as the harvest peaks and farmers are selling," a trader at a European firm in Ho Chi Minh City said. London's January robusta settled up 1.1 percent at $2,091 a tonne as arabica futures jumped to a one-month high on Wednesday. Exporters offered to sell Vietnamese robusta grade 2, 5 percent broken at discounts of $70-$80 a tonne, free on board (FOB), to the January contract, and some deals were sealed at a discount of $80, larger than discounts of $65-$75/tonne a week ago.
Higher-quality grade 1, screen 16 beans, equivalent to Sumatran beans, stood stable at discounts of $10-$20/tonne to London's January. Indonesia's Sumatran grade 4, 80 defect robusta was offered at a premium of $30 a tonne to London's January contract, or $2,120 a tonne, FOB Lampung, from $2,020-$2,050 last week.
SMALLER CROPS IN VIETNAM, INDONESIA Vietnam could produce 26 million to 27 million 60-kg bags in the current 2014/2015 crop year, said Mark Nucera, president of M.A. Nucera, an Atlanta-based commodities consultancy. Vietnam-based traders said the 2014/2015 output would be similar to the 28 million bags picked in the previous season.
In Indonesia, where consumption is growing, the 2014/2015 output would drop 7.4 percent to 8.8 million bags, with a decline of 100,000 bags in arabica due to drier weather in northern Sumatra, the US Department of Agriculture attache in Indonesia said. "Indonesia may have to import some beans from Vietnam given its growing consumption, and purchases could start now as the harvest peaks here," a second Vietnamese trader said. India's 2014/2015 production could rise to 5.1 million bags from 5.07 million bags in the previous season, the USDA attache in India said.
The crop year lasts from April to March in Indonesia and between October and September in Vietnam and India. Global demand is likely to climb 2.5 percent a year to reach 175 million bags by 2020, an International Coffee Organisation (ICO) executive said. Demand this year is estimated at 149.45 million bags globally, up 3 percent from 2013, based on ICO data.
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