Vietnamese coffee growers have started selling in the domestic market after hoarding since late February, but foreign firms are buying less as they wait for cheaper beans from rival robusta producer Indonesia, traders said on Thursday. The main 2015 coffee harvest season in Indonesia's major growing region of Lampung could begin in June, a month earlier than last year, with some areas starting even as early as May after favourable weather helped plant growth, farmers and stakeholders have said.
Supplies have already started trickling in and as a result Sumatran robusta grade 4, 80 defects are being offered at a $70 per tonne premium to London's July contract, versus around $100-$110 premiums for Vietnam's beans. "The beans are fresh and while the inflow has yet to jump, buyers could wait, except those who have to meet delivery requirements will have to take Vietnamese coffee," a trader in Ho Chi Minh City said.
ICE July robusta rose 0.9 percent to $1,841 a tonne on Wednesday, tracking gains in arabica. "Indonesia is creating pressure on Vietnam with a cheaper coffee," said a Vietnamese trader at a foreign firm which deals with both Indonesian and Vietnamese beans.
Robusta bean exports from Indonesia's main growing area in Sumatra gained 73 percent from a year ago to 20,046.26 tonnes in March and climbed 43 percent from February, reflecting the quickening harvest. Overseas Indonesian coffee sales could, however, come under pressure as the 2015 crop is likely to provide up to 700,000 tonnes, down from 711,500 tonnes in 2014. Also, domestic consumption growth of 8 percent a year would leave less beans for exports.
Vietnam's coffee exports in the first half of the 2014/2015 crop dropped a quarter from a year ago to nearly 650,000 tonnes, customs data shows, the lowest in five years. Vietnam and Indonesia together account for a quarter of the world's coffee exports. Sales by Vietnamese growers have picked up in recent days as prices recovered slightly after hoarding. But this coupled with a gain in London futures is now dragging on Vietnamese coffee values slightly. Vietnamese beans grade 2, 5 percent black and broken were offered at premiums of $30-$50 a tonne on Thursday, down from premiums of $50-$60 a week ago. Vietnam has exported nearly 410,000 tonnes of coffee between January 1 and April 15, down 42.5 percent on year, while shipment in the first half of April alone halved from last year to 56,000 tonnes, Vietnam Customs' data show.
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