Asia Coffee-Vietnam premium tightens as trade slows, Indonesian supply rises

HANOI: Vietnam coffee export premiums tightened amid slower trading, while Indonesian discounts widened on increased supply as the harvest season started to extend, traders said on Thursday.

The 5 percent black and broken grade 2 robusta was quoted at a $20 premium per tonne to London's ICE September contract in Vietnam, the world's top robusta maker, compared with $30-$40 premiums last week.

Vietnamese farmers quoted local prices at 44,000-44,200 dong ($1.94-$1.95) per kg, up from around 42,000 dong a week ago, which traders said made export quotes higher than import offers.

"It's hard for buyers and sellers to meet at this price...this phenomenon always happens this time every year when stockpile is thin," said Phan Hung Anh, deputy director of Anh Minh Co, a coffee-trading firm based in Daklak, Vietnam's largest coffee-growing province.

Traders expected June coffee exports to reach 90,000-120,000 tonnes (1.5 million-2 million 60-kg bags), a moderate level compared to May's estimated exports of 120,000 tonnes and slightly below April's 135,000 tonnes.

"Farmers would release more beans as they need money to buy fertiliser for the current crop...Brazil and Indonesia are selling, so there's no point for Vietnam to hold back beans now," said Nguyen Quang Binh, head of the coffee section at Visimex Joint Stock Company.

The US Department of Agriculture earlier this month forecast Vietnam's 2017/2018 harvest to increase 10 percent annually to 28.6 million bags of coffee, or 1.72 million tonnes, due to favourable weather in the first half of the year.

The department also revised down 2016/2017 coffee production in Vietnam to 26 million bags, from an earlier estimate of 26.7 million due to unusual rain during the harvest that resulted in more losses than previously expected.

In rival Indonesia, Lampung traders said Indonesian robusta grade 4 defect 80 were traded at a $40 discount to the July contract on Wednesday, compared with a $20-$30 discount last week.

"Trades are at their busiest this week and we are having a lot of incoming supply," a trader in Lampung said.

"Today alone, we are seeing around 300 incoming trucks," he said, adding one truck carries around 7 tonnes of coffee.

Markets in Indonesia were closed on Thursday for a public holiday.