Forecast of a bumper harvest in Vietnam sent domestic coffee prices to their lowest level in more than two years on Thursday, while supplies in Indonesia are quickly diminishing as the harvesting season draws to an end. Prices in Vietnam fell on expectation of a bumper harvest that will begin in October, a Dak Lak-based trader said.
"Prices have also fallen due to the recent weakening of the Brazilian real and the dong, as traders fear that there might be more dong devaluation later this year," the trader added. Traders forecast output of Vietnam's 2018-19 coffee crop year that begins in October at 1.85 million metric tonnes, up 4 percent from a year earlier.
"The harvest in the Central Highlands is expected to begin from late October, but if the weather is dry, it will take place one or two weeks earlier," another trader said.
Farmers in Vietnam, the world's second biggest coffee producer after Brazil, offered coffee at around 33,500 dong per kg, the lowest level since April 2016, and down from 34,200-34,400 a week earlier.
Vietnam's 5-percent black and broken grade 2 robusta was offered at $60-$70 per tonne discount to the London November contract, compared with last week's discount of $70-$100, traders said.
"Domestic stockpile is flat and no new deals have been made recently," the first trader said, adding that only 2-3 percent of the 2017-18 output remains unsold.
Meanwhile, coffee harvest in the southern part of Sumatra Island, Indonesia's main coffee producing area, is about to end, limiting supplies there.
Premiums for the grade 4 defect 80 robusta in Lampung Provice rose to $90 per tonne to November contract from last week's $70, a trader said. Another trader said premium narrowed to $130-$140 to November contract from $150 a week earlier.
"Still, there is decent supply, but activity is light because of the holiday yesterday," the second trader said. Indonesia celebrated Islamic holiday of sacrifice, Eid Al-Adha on Wednesday.
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