Supply of coffee beans from Vietnam's Central Highlands to the export market dropped as rain continued to disrupt the drying process, making exporters reluctant to offer new deals, while discounts were stable, traders said on Thursday. Several traders said November-end rainfall in the main coffee belt has hit the quality of cherries, raising the ratio of dark beans, which are considered a defect in exports.
Rainfall has also delayed the cherry-picking process in the Central Highlands, which produces 80 percent of the total coffee in the world's largest robusta-producing nation, raising concerns over supply in the next few weeks.
"Coffee is still being dried around each house everywhere as rain has not stopped fully," said a trader in Daklak, the country's top-growing province. Scattered showers and cloudy weather are expected across most parts of the coffee belt on Thursday, based on weather reports from four of the region's five provinces. "Exporters are reluctant to sign new deals as they do not have much fresh coffee handy," said another Daklak-based trader. Therefore, coffee exports this month will also include beans from the previous 2015/2016 crop, traders said. On the other hand, the upcoming year-end holiday season means foreign buyers will also not actively seek deals for outright shipments, said independent analyst Nguyen Quang Binh.
"The market will slow down and exporters will focus on loading for previously signed deals," he said. The weakening currencies in Brazil and Vietnam, the world's top coffee producers, could lead to a jump in sales, he added. The Vietnamese dong has fallen 1.4 percent since November 1 to 22,645 dong per dollar on Thursday on Vietnam's interbank market, compared with a 0.7 percent drop between January 1 and October 31, based on Thomson Reuters data.
ICE January robusta contract settled down 0.4 percent at $2,030 per tonne on Wednesday. "Prices (on the futures market) have been easing due to speculators dealing with their financial and speculation issues, but not because of supply-demand," Binh said.
Vietnamese robusta grade 2 was traded at $40-$50 a tonne to ICE March contract, while bids were heard at $60 a tonne. Last Thursday, the beans were offered at $40-$60 a tonne below the March contract. In Indonesia, premiums of robusta grade 4, 80 defects stood unchanged at $50-$60 a tonne to the ICE January contract, while stocks with farmers have depleted, traders in Bandar Lampung said.
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