Indonesia's coffee premiums narrowed further on expectations of an increase in supply ahead of this year's harvest, while in Vietnam weather conditions are positive for coffee growers but trade remains slow on tight supplies. Premiums for Indonesia's grade 4 defect 80 robusta contracted to $20-$30 a tonne to London's July contract from $40-$50 a week earlier, traders said.
"Bean prices in Lampung, Indonesia's main robusta producing area, extended their decline as supply is expected to continue rising as some areas in the southern Sumatra province have entered the harvest season," a trader said. In Vietnam, bean prices offered by traders in the Central Highlands, the country's main coffee growing region, edged up to 35,500-37,500 dong ($1.56-$1.65) per kilogram from 35,400-36,800 a week earlier, traders said.
"Sales are slow as farmers are not interested in selling at prices below 37,000 a kg," a Daklak-based trader said. "Supply is running low, with only around 30 percent of the 2017-2018 crop year output remained unsold." Weather conditions in the Central Highlands are favourable for the coming crop year, with moderate rains, Nguyen Viet Vinh, general secretary of the Vietnam Coffee and Cocoa Association, said.
"It's still too early to have a forecast on the 2018-19 crop year output, but the weather is good for the coffee trees, which are now bearing lots of baby fruits," Vinh told Reuters. Discounts to the July contract for Vietnam's 5 percent black and broken grade 2 robusta were at $80 a tonne, compared with $110 a week ago, traders said.