Asia Coffee-Prices hover near 2-year low in Vietnam, harvest nears end in Indonesia

HANOI/BANDAR LAMPUNG: Coffee prices in Vietnam hovered around their lowest level in more than two years this week following cues from international markets, while trade was light in Indonesia where harvest is coming to an end, traders said on Thursday.

Farmers in Vietnam, the world's second biggest coffee producer after Brazil, offered coffee at around 33,500 dong to 33,700 dong ($1.44-$1.45) per kg in the province of  Daklak, compared with 33,500 dong last week, traders said.

Trading was weak due to low domestic prices, which hovered around the lowest level since April 2016, and as farmers were left with only 2 percent of their stockpiles from the 2017/2018 crop year, said Phan Hung Anh, deputy director of Anh Minh Co.

Offers from importers and exporters did not match, traders said, with importers bidding Vietnam's 5-percent black and broken grade 2 robusta at $60-$80 discount to London's November contract, while exporters sought a $50 discount.

Vietnam is seen to have exported 135,000 tonnes of coffee in August, higher than traders' estimate of 100,00 tonnes-120,000 tonnes. Coffee exports in January-August rose 14.8 percent from a year earlier to 1.3 million tonnes, government data showed.

In the 2017/2018 crop year which ends next month, Vietnam has exported 27.58 million 60-kg bags of coffee as of August, according to government data. That is higher than the 25 million bag estimate for 2017/2018 by the United States Department of Agriculture.

Coffee expert Nguyen Quang Binh warned robusta prices might fall further if Brazil sells more robusta beans to the market and keeps arabica beans for domestic consumption, given the differences between arabica and robusta prices are now only half of what they were at the beginning of the year.

In Indonesia, premiums for the grade 4 defect 80 robusta in the province of Lampung were at $100 to the November contract, compared with $90-$140 premium last week, traders said.

Harvest is coming to an end in Lampung and surrounding areas in southern Sumatra, resulting in light trading, one trader said. Exporters also held onto their stocks on expectation of a rise in prices, another trader said.