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coffeeSINGAPORE: Premiums for Indonesian robustas were at their strongest since May this week but the high price scared off buyers, but a few cargoes of Vietnamese beans changed hands at discounts to London futures, dealers said on Thursday.


Sumatran grade 4, 80 defect beans were quoted at premiums of between $100 and $150 to London's second-month March contract , down from up to $170 last week, but the values were still at their highest level since May.


"It seems the demand for Indonesian coffee is pretty low this time. People also want to know the progress of the crop in Vietnam, which is why they are on the sidelines," said a dealer in Bandar Lampung, the provincial capital of Lampung in Sumatra.


"I don't think local roasters have started to turn to Vietnam right now. They still buy local beans even though the price is high. They also expect to get fresh beans from the fly crop at the end of January or early February."


The harvest ended in October in Indonesia, the world's second-largest robusta producer after Vietnam, and dealers await a smaller crop, or the fly crop, to start in December or January. The main harvest is still a few months away in April or May.


Indonesia's coffee output could rise nearly 13 percent in the year to September 2013, fuelled by improving weather, while rising demand from local roasters is likely to boost consumption and push up imports, a Reuters survey shows.


"It's extremely quiet in Indonesia. Sellers often offer beans at prices which don't make any sense. Too expensive. But they will respond whenever they receive firm bids," said the dealer in Bandar Lampung.


Vietnam grade 2, 5 percent black and broken beans stood at discounts of up to $70 to the London March contract, hardly changed from last week. London's March robusta futures settled up $5 at $1,886 a tonne on Wednesday.


Vietnam, the world's second-largest producer after Brazil, has picked more than half of its 2012/2013 crop, after harvesting a record crop of about 1.6 million tonnes in the recently ended 2011/2012 season.


The new crop could ease 9 percent from last year to 24.2 million bags (1.452 million tonnes), due to adverse weather, the US Department of Agriculture attache in Vietnam has said.


"There were a couple of buyers at $50 discount. But I would still think it's a pretty tight market. Buyers want to get the beans cheaper," said a dealer in Singapore, who trades Indonesian and Vietnamese beans.


"There's much movement in Indonesia. I heard that local food processors there are also long."



Dealers expect Vietnamese differentials to stay at the current levels next week on steady demand from roasters, but Indonesian premiums could weaken if buyers fail to show up.

Copyright Reuters, 2012

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