Coffee prices in Vietnam edged up about 2 percent this week after the world's second-largest producer after Brazil had sold nearly two thirds of its bumper crop, traders said on Tuesday. They said a storm now developing off the country's central coast only brought clouds to the Central Highlands coffee belt. The region that produces 80 percent of Vietnam's total coffee would not be affected by Storm Chan-Hom, they said.
Vietnamese exporters offered robusta beans grade 2, 5 percent black and broken at $1,375 a tonne, free-on-board (FOB) basis, up from $1,345 a tonne one week ago, quotations by the Vietnam Coffee and Cocoa Association showed.
On the domestic market robusta beans rose to 24,500-25,000 dong ($1.38-$1.41) per kg in the markets of Daklak and Lam Dong, Vietnam's largest coffee growing provinces in the Central Highlands, from 24,000-24,100 dong per kg last Tuesday. Robusta prices in Vietnam closely track London robusta futures which, along with New York arabica futures, rose last Friday thanks to broad-based gains in other commodity markets.
ICE July arabica futures surged 4.50 cents, or 3.9 percent, to close at $1.2040 per lb, a three-week peak. July robustas ended $42 higher at $1,495 per tonne. "It is a bit difficult now to buy locally because of a high price there," said a Vietnamese trader in Lam Dong province. Vietnam's FOB price meant a kg of coffee was priced at 24,400 dong for exports, and exporters had to buy beans at least below 24,000 dong per kg to make profits, while domestic prices were already higher than the export price, traders said.
TWO-THIRDS OF CROP SOLD Vietnamese coffee prices also edged up after the government said late last month the country had shipped 66 percent of the coffee from its latest harvest that ended in January. Vietnam had exported an estimated 12.92 million 60-kg bags between October 2008 and last month, the first seven months of the 2008/2009 crop year, up 20 percent from a year earlier.
More had been sold but has not been shipped, traders said. The crop produced 19.5 million bags, according to a Reuters poll on January 29, up from 18 million bags in the previous season. Vietnam consumes around 1 million bags of coffee a year. Having deducted the coffee shipment and domestic consumption, traders said Vietnam may still have 4 million bags unsold.
Vietnamese farmers also often retain 1 million bags or more for blending with fresh beans in October and early November before the harvest peaks from late November. The rainy season has now arrived in the coffee belt, but rains were still light and not yet regular, traders said.
"Now if the storm bring heavy rains in, cherries may drop but so far it's been only cloudy," the Lam Dong-based trader said. It was also cloudy in Daklak, Vietnam's largest coffee growing province, with light rains in recent days, while there were no signs of Storm Chan-Hom, a provincial official said.