Premiums of Vietnamese coffee prices to London futures narrowed this week as more fresh beans from the country's harvest arrived but exporters may have delayed some of their deliveries due this month due to slow domestic purchases, traders said on Tuesday.
Supplies are expected to pick up in coming weeks as farmers have harvested up to 80 percent of the 2011/2012 crop in key areas in the Central Highlands coffee belt, and they would end picking cherries in mid-January, traders said. "They are expected to sell some stocks this week before Christmas and also before Tet," said a trader from Buon Ma Thuot, the capital of Daklak province in the Central Highlands.
Many Vietnamese coffee growers are Catholic. Tet is Vietnam's largest festival to mark the arrival of the Lunar New Year on January 23. The Southeast Asian nation is the world's top robusta producer. During the week-long festival all markets are closed, before which farmers are expected to end the harvest, the Daklak trader said.
"Farmers already sold more to buying agents and exporters from late last week, but they have not rushed drying all the cherries they have just picked," he said. Farmers were expected to sell a third of their stocks before Tet, lower than last year when they sold 40-45 percent of their crop to celebrate the lunar new year, he added. A Vietnamese exporter in Daklak told Reuters his company's domestic purchases were slow and he did not expect sales to pick up in coming weeks. The slow sales have prevented exporters from securing sufficient beans, which may delay some of their deliveries due this month, traders said.
"There will definitely be some delays as exporters could not buy locally for loading," the Daklak exporter said. He estimated Vietnam has sold around 10 percent of its new crop and up to half of the volume sold could face delays. The volume facing delays could total around 1 million bags, based on a crop output of 20.83 million bags estimated by Vietnam's top exporter Intimex this month.
Domestic prices easing in line with London futures market have also discouraged farmers' sales, traders said. Robusta prices eased to 39.0-39.4 million dong ($1,857-$1,876) a tonne in Daklak on Tuesday, from 39.5 million dong the previous day and 39.2-39.4 million dong last Thursday.
The fall tracked losses on Liffe where the March contract lost $19 to end at 1,878 a tonne on Monday. Exporters quoted Vietnamese beans grade 2, 5 percent black and broken at premiums of $30-$40 a tonne to London's March, narrowing from $40-$70 a tonne last week, while bids were at premiums of $15-$20 a tonne. "Only some buyers in short positions have taken some cargoes, while most are still staying on the sidelines," the first trader said.
The premiums placed Vietnamese robusta beans at $$1,898-$1,918 a tonne, free-on-board basis, compared with $1,862-$1,962 a tonne last Thursday. Output from Vietnam's next 2012/2013 coffee crop could fall from this year's bumper crop due to early blossoms in the Central Highlands following adverse weather, traders said. "The early flowers could drop during the upcoming watering process, and that means a loss to the next crop's output," the first trader said. "In case the flowers can hold on, the harvest next year may come early."