Trading in Asian coffee picked up this week as farmers in top robusta producer Vietnam offloaded stocks to benefit from rising prices and as demand rose ahead of the peak harvest season in Indonesia, traders said on Thursday. Rising shipments from Vietnam and Indonesia, which together accounted for nearly 30 percent of global coffee output in 2015/16, could help narrow a supply deficit expected this year.
Speculative buying and strength in Brazil's real currency supported coffee futures, with the ICE September contract ending 0.82 percent higher at $1,726/tonne on Wednesday. Demand by US roasters to replenish stocks with Vietnamese robusta, now the cheapest among the three origins of the bitter beans used mainly for instant coffee, could rise in the coming months, traders in Europe said.
In Daklak, Vietnam's top growing province, prices of the beans rose to between 37.3 million and 37.8 million dong per tonne ($1,670-$1,692) on Thursday from 36-36.2 million dong a week ago. At 37.8 million dong, prices were at their highest level since August 19, 2015, Thomson Reuters data shows. "As prices are higher now, both farmers and buying agents are selling, and the volume has picked up from last week," said a trader in Buon Ma Thuot, Daklak's capital. Premiums for Vietnamese robusta grade 2, 5 percent black and broken narrowed to $20-$30 a tonne to the September contract, from $30-$40 a tonne a week ago. Futures and differentials often move opposite. "Bids and ask prices are not too much different now," a trader in Ho Chi Minh City said, referring to higher robusta futures.