Vietnamese robusta coffee prices rose to the highest in nearly six months on Thursday, boosted by gains in global robusta futures markets and thin domestic supply as farmers were holding back stocks, traders said. Thin foreign buying demand has added to the sluggish export market after the world's top robusta producer had a long holiday that ended on Tuesday.
Premiums of Vietnamese robusta grade 2, 5 percent black and broken beans, narrowed to $50 to $55 a tonne to ICE July contract, from premiums of $50-$60 a week ago, placing the beans at $1,635 to $1,640 a tonne, free-on-board Saigon Port. At $1,640 a tonne, the price is the highest since November 12, 2015, according to data on Reuters. The ICE July contract ended up $6, or 0.4 percent, at $1,585 per tonne on Wednesday, from $1,573 a week ago.
"Farmers are selling slowly, while demand for a quick and large purchase (of Vietnamese coffee) is not around," said a trader at a foreign firm in Ho Chi Minh City, Vietnam's biggest coffee trading market. Huge stocks held by the foreign trading firms, including the beans kept in the city's warehouses, mean the companies did not have to rush their purchases from growers now, the trader said. Vietnam's coffee exports between October 2015 and April 2016 jumped 27.4 percent from a year ago to an estimated 976,200 tonnes, based on government data.
Vietnam's rival robusta producer Indonesia is heading into an extended weekend, with all markets closed for a holiday from May 5-6. Traders said a drought hitting Vietnam's Central Highlands coffee belt since February has yet to weaken, despite some showers falling earlier this week in some areas in Daklak, Vietnam's top growing province. Water shortages and dryness are expected to linger in Daklak, as well as in the nearby provinces of Gia Lai and Kontum through Friday, the national weather centre said in a short-term report published earlier this week. Vietnam's coffee exports could fall 25 percent in 2016 to their lowest in a decade at 1 million tonnes (16.67 million 60-kg bags) due in part to drought, Vietnam Coffee and Cocoa Association chairman Luong Van Tu has said.