Vietnam coffee buying demand thin on ample supply

Demand for Vietnamese coffee is expected to stay moderate and prices would be stable in the last three months of the current 2014/2015 crop year given ample stocks in the country, traders said on Tuesday. Vietnam, the world's largest robusta producer, is wrapping up the first three quarters of the 2014/2015 season with coffee shipments at a five-year low, leaving a huge stock for the July-September period.
"Recent sales have been going well, but as prices edge up, some speculators have again held back," a trader in Ho Chi Minh City said. ICE September robustas settled up $29, or 1.6 percent, at $1,802 a tonne on Monday. The contract has risen nearly 5 percent since the end of May, as arabica futures extended gains due partly to a bullish crop report from Neumann Kaffee Gruppe and a strengthening currency in top producer Brazil.
Huge stocks and the next crop looking good would keep buying demand moderate, making it hard for domestic prices to reach a key level of 40,000 dong ($1.84) per kg as expected earlier by speculators and some farmers, traders said. Vietnam could produce 28.6 million 60-kg bags from its next 2015/2016 crop, from 28.2 million bags in the current crop, the US Department of Agriculture said last Friday.
The country will export at least 975,000 tonnes (16.25 million bags) of coffee in the first three quarters of the 2014/2015 crop year ending June, down 26 percent from a year ago, based on government data and traders' estimates. The crop year lasts from October to September. Coffee exports in the first half of June posted a 9 percent annual fall to 53,200 tonnes, Vietnam Customs data show, suggesting the full-month shipment could be 100,000 tonnes, in line with traders' forecasts of 70,000-120,000 tonnes.
As such, Vietnam may still hold 12 million bags from the 2014/2015 harvest, or double the volume a year ago. "This huge stock creates high pressure on market prices," a trader at a foreign firm in Ho Chi Minh City said. Robusta stood at 37,400-38,800 dong per kg on Tuesday in Daklak, the country's top growing province, from 36,900-37,900 dong a week ago. Premiums of Vietnamese robusta grade 2, 5 percent black and broken beans stood at $40-$55 a tonne to the September contract, against premiums of $40-$60 last Tuesday.