Vietnamese coffee trade slowing before holiday

Trading in Vietnamese coffee has been dull despite gains in futures prices ahead of a long market holiday, while Indonesian prices appeared uncompetitive two months before its next harvest, traders said on Thursday. Vietnam, the world's largest producer of robusta beans, ended the harvest early last month, while rival producer Indonesia will begin picking up cherries in April. The two account for around a quarter of the world's total coffee.
"Sales are still going, but not much coffee is coming from farmers, mostly small companies are selling," a trader said from Daklak, Vietnam's largest growing province. Domestic prices have picked up slightly in line with gains in London robusta markets, while most farmers have not rushed to sell, waiting for higher prices, he said.
While robusta futures could rise to $1,500 per tonne by the end of March, coffee bulls should not expect the first deficit in six years to usher in a return to the days of $2-a-lb arabica prices, a Reuters survey showed. The ICE May contract ended up 0.3 percent at $1,431 a tonne on Wednesday. The futures market hit a 5-1/2-year low late last month. Vietnam shuts all markets from February 6-14 to mark Tet, or the Lunar New Year festival.
Many exporters have stopped giving quotations on Thursday, and their last offer for robusta grade 2, 5 percent black and broken was at a premium of $30 per tonne to the ICE May contract, while bids were at par with London futures. Beans grade 1, similar to Sumatran coffee, stood at premiums of $80-$90 a tonne. Indonesia's robusta grade 4, 80 defects was offered at $1,600-$1,630 a tonne, free-on-board Lampung, or $130-$200 per tonne above London prices, down from premiums of $180-$210 a tonne a week ago.
Supply has been tight in recent months due to strong domestic consumption, cutting into Indonesia's exports in recent months, according to traders and government data. Robusta exports in January from Indonesia's main growing area in Sumatra fell 52 percent from a year earlier to around 8,400 tonnes, government trade data show, the fifth consecutive monthly fall since last September. The supply crunch has prompted some Indonesian firms to import Vietnamese coffee, an exporter in Vietnam has said.