Premiums of Vietnamese coffee to London futures prices narrowed on Tuesday and farmers who had tightened supply were more willing to sell beans as global robusta prices strengthened, traders said. Premiums for robusta grade 2, 5 percent black and broken fell to $70 to $80 a tonne to the Liffe September contract, having risen to a near two-year high at $110 to $130 a week ago.
More sales from Vietnam, the world's top robusta producer, would help maintain global supplies in coming months of the variety used for making instant coffee, traders said. Liffe September robusta coffee finished down $24, or 1.2 percent, at $1,944 a tonne, consolidating after a recent rally that lifted second-month prices more than 15 percent from mid-June to last Friday.
"The prices were increasing, both farmers and exporters want to sell now," a trader in Ho Chi Minh City said. Another said demand was not high as Vietnam's beans were less competitive than Indonesia's. "We haven't bought more Vietnamese beans so far. We're trying to get more from Indonesia. It's still much cheaper," said a dealer in Singapore. Vietnamese robusta gained about 2 percent in the past week, advancing to as high as 41,000 dong per kg on Tuesday in Daklak, the country's largest growing province, from 40,200-40,600 dong a week ago.
Traders last week slashed their forecasts of coffee exports in July to 70,000-80,000 tonnes (1.17 million to 1.33 million bags), below the shipment volume in June. June shipments stood at 88,000 tonnes, a 37 percent drop from the same month last year, according to official datka.