Indonesian coffee bean prices fall; Vietnam's harvest picks up

Fresh coffee bean prices in Indonesia, the world's third-biggest robusta producer, fell below those quoted by top producer Vietnam this week as a pickup in harvest boosted supplies, traders said. Indonesian premiums also narrowed after London robusta futures rose beyond $1,800/tonne earlier this month, traders in Indonesia said.
"We are now competing with Vietnam because our price is cheaper, and this condition is unusual in the last three to four years," said an exporter from Lampung. Premiums of Indonesian robusta grade 4, 80 defects stood unchanged in the past week at $10-$20 a tonne to the ICE September robusta contract, but were down from premiums of $80-$120/tonne in late June.
The current premiums are the smallest since September 24, 2015, based on Thomson Reuters data. Vietnam's robusta grade 1, screen 16, similar to Sumatran coffee, stood at premiums of $20-$40/tonne to ICE September. The September contract was up 0.33 percent at 0857 GMT on Thursday after settling up 0.2 percent at $1,816 a tonne the previous day.
Futures and differentials often move in opposite ways. Robusta coffee futures are expected to remain near 16-month highs for the next few months boosted by tight stocks, with the jury still out on whether an expected La Nina weather pattern will eat into supply, industry sources say. Coffee prices would be stable in the coming months as the Brazilian real will trade sideways while supply outlook remains strong due to Brazil's large harvest, said BMI Research, a FitchGroup company.
In top robusta producer Vietnam, buying has slowed on declining stocks of the benchmark beans grade 2, and exporters were more willing to sell higher quality beans grade 1, traders said. "Sales are slowing as the crop year is ending, but sales could jump again if prices rise to 40,000 dong ($1.79 per kg)," said a trader in Ho Chi Minh City.
Robusta grade 2, 5 percent black and broken beans were quoted at discounts of $10-$20 a tonne to ICE September robusta on Thursday, compared with discounts of $40-$50 earlier this week, placing the beans at $1,796-$1,806 a tonne, free-on-board basis. The same variety is also offered at discounts of $10 a tonne to the ICE November contract.