Vietnam coffee sales steady, Indonesian supply tight

Coffee sales from Vietnam, the world's top robusta producer, have been steady in the past week as speculators extended offloading, while thin supply from Indonesia's harvest hardly meets domestic demand, traders said on Thursday. A gain in robusta futures in the past week has triggered Vietnamese speculators and some farmers to sell part of their stocks to narrow losses, as domestic prices failed their expectations, traders said.
July robusta ended up $6, or 0.3 percent, at $1,740 a tonne on Wednesday. The contract has risen 6.6 percent so far this month. "As prices return near 38,000 dong (per kg), some have started to sell to cut losses," a Vietnamese trader said. Speculators and some wealthy farmers built up stocks when robustas were 40,000 dong per kg in late February, but prices have since fallen, having squeezed the country's coffee shipment as of May 2015 to a five-year low.
Buyers turned to other suppliers, boosting Brazil's shipment to a record while more sales also came from Indonesia. Premiums of Vietnamese robusta grade 2, 5 percent black and broken widened $50-$70 per tonne to ICE September contract, from premiums of $50-$60 last Thursday. Grade 1 beans, screen 16 stood at premiums of $110-$130 a tonne. In Indonesia, Vietnam's robusta rival, Sumatran robusta grade 4, 80 defects stood unchanged in the past week at $1,850-$1,870 per tonne, free-on-board Lampung.
Indonesian roasters extended their strong demand for fresh robusta while the inflow from the harvest of a smaller crop has slowed, traders said. Indonesia's 2015 coffee output is projected at 600,000-650,000 tonnes, down 50,000 tonnes from a previous industry forecast. The country's crop year last between April and March, while Vietnam's season begins in October and ends in September. The two nations account for a quarter of global coffee exports.
Vietnam has been facing extended El Nino impact and more hot spells are expected in June and July in its central region, state media said on Thursday. "Rain seems less, shorter and it comes every few days, unlike in the past when rain was longer and more regular in June," said Le Duc Huy, deputy general director of Simexco Daklak, one of Vietnam's biggest coffee export firms. The absence of rain when trees require fertiliser could stunt the growth of coffee cherries and may lead to lower yields, traders said.