Sales of Vietnamese coffee slowed this week even though the harvest has been peaking, with Vietnamese exporters expecting prices to drop further following recent declines in global markets, traders said on Tuesday. With 60-70 percent of the 2014/2015 crop having been picked in Vietnam, the world's largest robusta producer, the harvest could end late this month, similar to last year, traders said.
Beans dropped to 39,500-39,700 dong ($1.85) per kg on Tuesday in Daklak, from 40,400-40,600 dong a week ago, after London's March contract fell 0.5 percent to settle at $1,965 a tonne on Monday. "Selling is slow as people fear further price drops," said a trader in Ho Chi Minh City, the country's main coffee trading market. The March contract has lost around 3 percent in the past week.
Robusta futures have been on a decline so far this month following news of rain in top producer Brazil, but the rain may not help recover earlier crop losses, analysts said. Discounts of Vietnamese robusta grade 2, 5-percent black and broken narrowed to $45-$70 a tonne to the March contract, down from discounts of $60-$85 a tonne a week ago. The beans are used mainly for making instant coffee. Fresh cherries are being dried everywhere on farmers' yards in Daklak, the country's largest growing province, said a trader in Buon Ma Thuot, the province's capital.
The province saw light rain on Tuesday morning, preventing harvesting and possibly affecting bean quality, traders said. Showers are also forecast in other provinces in the Central Highlands coffee belt during the day, the national weather centre said in a bulletin. "Beans being dried now could turn black and mouldy so the quality of this recently picked batch of cherries could be bad if rain is prolonged," said a Daklak-based trader.
It takes up to 10 days for cherries to be picked, dried, bagged and moved to Ho Chi Minh City for loading. Traders forecast the October 2014/September 2015 crop output at 26 million to 30 million bags, against a record 30 million bags in the 2013/2014 season.
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