High local coffee prices have stunted exports from Vietnam, the world's top robust bean supplier, as exporters hold out for higher prices for a drought-hit crop, traders said on Tuesday. Last September's arrival of the dry season has developed into a drought hitting crops in Vietnam's Central Highlands coffee belt. While traders fret over a smaller crop, farmers and exporters expect prices to rise further, so they are holding back stocks.
Traders said coffee beans were now mainly held by exporters, as farmers have unloaded stocks for cash to pay to water their trees. On Monday, an official at the Central Highlands province of Daklak said the rainy season could be two weeks late, damaging this year's crop in the parched coffee belt and possibly threatening long-term production.
The late rains and a slightly easier US dollar helped push London's robust futures to a 10-day high on Monday.
July closed $13 up at $1,004 a tonne. On Tuesday, prices in Daklak edged up to 14,420 dong (91.3 US cents) per kg from 14,400 dong on Monday and a range of 12,920-13,000 dong per kg last week.
"The market has been frozen as local prices are too high," said a trader in Ho Chi Minh City. Vietnamese robust grade-2, 5 percent black and broken beans are quoted at $950-$970 per tonne, free-on-board Saigon, from $837 last week.
Foreign traders said they could accept a buying price at a discount of $100 to the July contract or around $900 a tonne. "Prices have been fluctuating and exporters held back as they expected further gains, so we can't buy," said a second trader.
Traders said the slow trade would cut coffee shipments this month to 60,000 tonnes from an estimated 75,000 tonnes in March. The government put loading last month at 85,900 tonnes.
Government data showed Vietnam exported 428,000 tonnes, or 7.13 million 60-kg bags, of coffee in the six months to end-March, down from 461,000 tonnes a year, partly because exporters held back stocks.
Vietnam's next harvest would normally start in late October after the rainy season, but traders are uncertain if harvesting will be on time this year given the forecast late rains.
Vietnam's crop year runs between October and September.