A good inflow of fresh robusta beans coupled with huge coffee stocks from the previous crop kept up the pressure on Vietnam's coffee market this week, traders said on Thursday. In Indonesia, Vietnam's rival in robusta production, stocks were still stable after the harvest ended while differentials widened, traders said. Vietnam, the world's largest producer of robusta coffee, has harvested around half its 2015/2016 crop, with output projected to be above or at least at par with that of the previous season, while coffee exports have not picked up at last year's pace.
"The stocks of old-crop beans are plentiful and fresh beans are also arriving," a Vietnamese trader at a foreign firm in Ho Chi Minh City said. Premiums of Vietnam's robusta grade 2, 5 percent black and broken narrowed to $20-$25 a tonne to ICE March robusta contract, from premiums of $30-$50 last Thursday. The contract ended down 0.13 percent on Wednesday at $1,555 a tonne, above the price of $1,526 a week ago. Robusta grade 1, similar to Sumatran coffee, was offered at premiums of $70-$80 a tonne.
December coffee exports are expected at 100,000-120,000 tonnes (1.67 million to 2 million bags), traders said, against 100,000 tonnes estimated for last month. In December 2014, shipments jumped 37 percent from the previous month to 115,400 tonnes, based on government data. Vietnam's 2015/2016 crop output is expected to rise 1.4 percent to 28.3 million 60-kg bags, Fitch Ratings' BMI Research said in a report last week.
Traders in the country estimated the harvest at between 26.7 million and 29 million bags. In Indonesia, premiums for Sumatran beans grade 4, 80 defects advanced to $150-$200 a tonne to London futures, from premiums of $140-$150/tonne last week. Global coffee supplies in 2016 are expected to be tight due to an expected slowdown in exports from top grower Brazil and dry weather affecting Indonesia's production, analysts and dealers said last week.
But in Indonesia, projections for the 2016 crop are less pessimistic. "Terminal price is lower, so that means production is good," a Lampung-based trader said. "If production is predicted bad the terminal price would have gone up. Terminal price won't lie." He said output in low-lying areas may fall, but that can be balanced by supplies from high-altitude areas.
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