Vietnam coffee prices climbed to an eight-month high on Tuesday amid slow trading as farmers held back stocks, already thin at about 10 to 15 percent of their last harvest, in the hope that prices would rise further, traders said. Robusta beans rose to between 43,500-45,000 dong ($2.09-$2.16) per kg in the Central Highlands coffee belt on Tuesday, tracking overnight gains in London futures.
The higher end of the price range is the most Vietnamese robusta has fetched since September. Last week, prices were at 42,800-43,000 dong. "Farmers are still waiting, and some have eyed a price of 50,000 dong ($2.4 per kg)," a trader in Ho Chi Minh City said.
Vietnam, the world's second-largest producer after Brazil, may have harvested a record 2011/2012 crop of between 1.35 million and 1.4 million tonnes, or 22.5-23.3 million 60-kg bags, several traders said after their crop surveys this month. Prices reached 46,600 dong per kg in the week ending September 23, 2011. In late May last year the bitter beans used for making instant coffee rose to its lifetime high of 52,000 dong per kg.
"People who have coffee now do not need to sell, so they will wait for prices to rise," another trader said by telephone from Lam Dong, Vietnam's second-largest growing province after Daklak. Exporters have started switching to the September contract , offering discounts of between $35-$50 a tonne for Vietnamese robusta grade 2, 5 percent black and broken, but buying was not active, traders said.
The discounts meant the Vietnamese beans were worth $2,178-$2,193 a tonne, free-on-board Saigon Port, up from $2,122-$2,142 a tonne a week ago. "Holding coffee now is like having an asset that farmers do not need to sell right away, because if they do, they may spend some of the cash, and they are also reluctant to keep cash in banks on fears of high inflation," the first trader said.