Coffee exports from top robusta producer Vietnam have been steady with some speculation emerging that prices could rise, while Indonesia's harvest is yet to accelerate, traders said on Thursday. ICE July robusta settled up 0.7 percent at $1,671 per tonne after touching a six-month peak of $1,672 on dry weather in Southeast Asia.
"Robusta prices have risen in recent months on the back of exceptionally dry weather in Asia due to El Nino, and we expect this rally to continue due to a deteriorating fundamental picture," BMI Research said in its May 11 report. Vietnamese robusta prices tracked the gain, rising to 36,100-36,300 dong ($1.62-$1.63) per kg in Daklak, Vietnam's top growing province, from 35,400-35,500 dong on Tuesday.
"While prices are rising, the actual volume sold is small as speculators start working now, holding back beans," said a Vietnamese trader in Daklak. At 36,300 dong, the price is the highest since November 6, 2015, according to data on Reuters. Premiums of Vietnamese robusta grade 2, 5 percent black and broken stood at $30-$40 a tonne to the July contract this week, from premiums of $50-$55 last week.
Robusta beans grade 1, screen 16, similar to Sumatran coffee were quoted at premiums of $80-$85 a tonne, from a premium of $100 in late April. Traders in Vietnam said buyers were awaiting Indonesia's harvest for better deals on fresh arrivals. But the harvest has yet to accelerate, traders in Indonesia said. Premiums of beans grade 4, 80 defects eased to $120-$180 a tonne to the July contract, from premiums of $200-$280 a tonne in late April.
Differentials and futures often move in opposite directions. "The goods (stocks) were ample this Tuesday, but by Wednesday it went down again. It's (stocks) not yet full and stable," said an exporter in Lampung, the main growing area. Indonesia's next 2016/2017 crop output is forecast to drop 20 percent, BMI Research said in its Wednesday report, revising from its previous projection of a 10 percent fall.
For Vietnam, the Fitch Group company also revised its projection, saying output would fall 8 percent. Its forecast in April envisaged a 3 percent increase. Robusta outperformance will wane in coming months as La Nina will likely bring wet weather to Southeast Asia and dry weather to the Americas, the report said.