Asia Coffee-Vietnam domestic prices near three-month low; output seen lower

HANOI: Vietnam's domestic coffee prices continued to fall to near three-month low as the harvest in the country is peaking, but local traders and an industry official forecast a drop in output.

Farmers in Dak Lak province in the Central Highlands, the country's largest coffee growing area, have harvested nearly 80 percent of their 2018/19 crop, while it is around 50 percent in other provinces in the area.

"The harvest is peaking and the ongoing rain in nearby central parts of Vietnam doesn't impact the harvest pace," Luong Van Tu, chairman of Vietnam Coffee and Cocoa Association, told Reuters on Thursday.

Vietnamese farmers sold coffee at 33,500 dong ($1.44) per kg <COFVN-DAK>, the lowest level since late September and down from 34,200-34,300 dong a week earlier.

"Prices are so low that many farmers are hesitant to sell their beans," a trader based in Dak Lak province said. "Farmers said they would cut spending on fertilisers if prices stayed low for longer."

Tu said output of the 2018/19 crop year is forecast to be lower than the previous crop year, in line with  local traders' forecasts last week.

"The cherries look big and juicy but many of them have only one seed inside instead of two, and I think that the weather conditions earlier in the crop were to blame for," Tu said.

However, the U.S. Department of Agriculture earlier this month raised the output and exports forecasts of Vietnam's 2018/2019 crop, also citing favourable weather conditions.

Traders in Vietnam offered the 5 percent black and broken grade 2 robusta <COFVN-G25-SAI> at a $80-$85 per tonne discount to the March contract, widening from $40-$65 last week.

In Indonesia, premiums for the grade 4 defect 80 robusta <COFID-G4-USD> were at a premium of $20-$30 to the March contract, unchanged from last week, a trader in the province of Lampung said. Another trader said the premium stayed flat from last week at $50.

"There were nearly no transactions in local market because supply from coffee centres are gone," said one of the traders, although he suspected a few farmers or middlemen in some areas were holding on to their stocks, unwilling to sell at current prices.