Vietnam's domestic coffee prices jumped to their highest in nearly a year while demand in Indonesia was weak as buyers eyed Vietnam harvest for cues, traders said on Thursday. Traders said farmers in the Central Highlands, Vietnam's largest coffee growing area, sold coffee at 38,000-38,500 dong ($1.63-$1.65) per kg, a level unseen since November last year, according to Refinitiv Eikon data.
Market was upbeat this weak on higher prices and farmers have finally released beans after holding on to their last stocks of the 2017/2018 crop year for months due to low prices in the international market, traders said. London's January contract has risen 15 percent so far this month to close at $1,776 a tonne on Wednesday, its highest close since May, which traders said was backed by a stronger currency in Brazil, the world's top coffee producer.
Exporters offered Vietnam's 5-percent black and broken grade 2 robusta at $60-$80 discount per tonne to London's January contract, compared with the $50-$60 discount last week, traders said. Weather has been improving, with more sunshine in the past week in Central Highlands, after weeks of rains that sparked concerns on beans quality, traders said, adding that they expect harvest to happen as early as this month or in early November.
"We need the sun to be out longer to help the coffee cherries ripe but whether the quality of the bean is good after those weeks of rains, we have to wait until the harvest," said a Ho Chi Minh City-based trader. Weather in the Central Highlands during October 18-26 would be mostly sunny with a mix of rains and occasional heavy showers and thunderstorms, the National Centre For Hydro-Meteorological Forecasting said on its website.
In rival Indonesia, traders said premiums for the grade 4 defect 80 robusta tightened to $0-$20 to the January contract, from $25-$30 premium a tonne last week as demand from overseas stagnate ahead of Vietnam's harvest. Higher prices in London kept premium in Indonesia small, while stock continued to thin out after the country's main harvest ended last month, traders said.
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