Lower global prices have curtailed coffee trading in Vietnam, the world's largest robusta producer, but farmers are expected to unload beans next month ahead of the country's biggest annual festival, traders said on Tuesday. Robusta futures have fallen around 10 percent this month, making it difficult for Vietnamese exporters to buy on domestic markets as farmers do not want to lower their selling prices despite ample supply at the harvest end, traders said.
"In order to secure beans for loading, exporters have to offer buying prices higher than their export price, so domestic prices are high and many exporters are trading at a loss," a trader in Ho Chi Minh City said. Robusta stood at 38,500-39,000 dong ($1.80-$1.82) per kg on Tuesday in Daklak, Vietnam's top growing province, down from 39,200 dong on Monday but little changed from 38,500-39,100 dong per kg a week ago.
Domestic prices this year have risen around 14 percent from 34,100 dong per kg on December 31, 2013, based on Reuters data. The price fall on Tuesday tracked the London futures market, where the March robusta contract lost $28, or 1.5 percent, to settle at $1,875 per tonne and March arabica coffee futures hit a more than 5-month low on Monday. The March robusta contract has lost 9 percent so far this month. "It is difficult to buy beans from farmers now, but they are expected to sell in the second half of January before Tet," another trader in Ho Chi Minh City said, referring to Vietnam's New Year festival in February.
Vietnamese robusta grade 2, 5 percent black and broken stood at par to a premium of $15 a tonne to London's March contract, compared with par to discounts of $45 a tonne a week ago. Bids this week were at discounts of $50-$60 a tonne. After recent falls the London market could open up slightly, independent coffee analyst Nguyen Quang Binh said. Vietnam's December coffee exports rose 42.8 percent from last month to an estimated 120,000 tonnes (2 million 60-kg bags), in line with market expectations, the government said.
The December volume brought shipments in the first quarter of the 2014/2015 crop year to 299,800 tonnes, up 8.6 percent from a year ago. The crop year lasts from October to September. Vietnam's 2014/2015 output could ease 1.6 percent to 29.4 million bags, the US Department of Agriculture said, from a record 30 million bags in 2013/2014.