Discounts of Vietnamese coffee stood stable on Thursday, with September export volume hitting a seven-month low as stocks dwindled ahead of the new harvest, while Indonesia's supply also decreased, traders said on Thursday. Vietnam, the world's top robusta producer, exported an estimated 120,000 tonnes of coffee this month, up 37.8 percent from a year ago, based on government data.
But the estimate is the lowest since February, 2016, when Vietnam shipped 119,000 tonnes. "Vietnam is running out of stocks and little is left in Indonesia," a trader at a foreign firm in Ho Chi Minh City said. Farmers in Vietnam may not sell quickly as they expected a smaller harvest and a delay to the harvest peak, he added. "There will be no selling pressure so prices would be stable at the start of the new season," he added.
Vietnam's new 2016/2017 season begins on Saturday, with the harvest to start in late October and peak in December, about two weeks later than usual. The Vietnam Coffee and Cocoa Association has forecast 2016/2017 output to drop 20-25 percent due to drought. A Reuters poll in July placed the next harvest at 26.5 million 60-kg bags, or nearly four percent below the 27.5-million-bag estimate of the current season, according to International Coffee Organization data.
After shipping 1.74 million tonnes, a record high, between October 2015 and September 2016, Vietnam may still have around 300,000 tonnes in carryover stocks, traders estimated, down from 480,000 tonnes available at the start of this season. Vietnamese robusta grade 2 stood at discounts of $25-$30 a tonne to ICE November contract, widening from discounts of $10-$20 last Thursday. Beans Grade 1, similar to the Sumatran coffee, was quoting at a premium of $25-$30 a tonne to the November contract.
The contract settled up 0.05 percent at $1,996 per tonne on Wednesday, hovering below last week's peak of $2,028, its highest since February 2015 due to supply concerns. Indonesia's robusta grade 4, 80 defects were quoting at par or a premium of $5 a tonne to the November contract, switching from discounts of $15-$20 a tonne last week. Supply has started to decline as the harvest period is ending, said an exporter in Lampung in the country's main growing area of Sumatra. Vietnam and Indonesia supply a combined 28 percent of the world's total coffee.