Vietnam's coffee prices jump around four percent

Coffee prices in Vietnam's domestic market jumped around 4 percent this week to 37.1 million dong ($1,907) per tonne on Friday, even though supply is ample as the harvest draws to an end, traders said. Robusta beans jumped from around 35.7 million dong per tonne on Monday in Daklak, the country's top growing province, tracking a rise in London robusta futures which closed strong after touching a 2-1/4-year high.
Coffee prices in Vietnam were approaching a level of 37.4 million dong recorded on August 6, 2008, as roasters have been switching to buying cheaper robusta beans given the surge in arabica market in the past month. Arabica in New York hit its highest level since mid-1997 last week.
In Vietnam, the world's second-largest coffee producer after Brazil and the biggest in robusta production, fresh beans have become ample after rains had delayed the start of the harvesting to November, a month later than usual. A trader at a foreign company in Ho Chi Minh City said the harvest ended this week in most of the Central Highlands coffee belt, giving a strong boost to domestic supply.
A coffee exporter based in Daklak province said his company's warehouse in Ho Chi Minh City has been busy taking in cargoes from the Central Highlands region, which produces around 80 percent of Vietnam's coffee. While the volume of fresh beans has risen, the market was still waiting to see if Vietnamese robusta had any quality problems.
An Industry and Trade Ministry report said Vietnamese coffee exporters could find more buyers in 2011, but "it would be tough to ensure quality standards", the Vietnam Economic Times newspaper reported on Friday. On Thursday, Andrea Thompson, an analyst at Coffee Network, said the quality of Vietnamese beans was now "the primary concern rather than quantity".
London March contract settled up 3 percent at $2,084 per tonne, having earlier touched a 2-1/4-year peak of $2,152. "Prolonged rains had affected the harvesting process, red cherries dropped before farmers picked them while the green ones could not mature in time," Chairman Luong Van Tu of the Vietnam Coffee and Cocoa Association said.
"But now the quality of coffee no longer depends on the weather, as processing technology has helped deal with all quality problems, so beans for export are good and the rains only cut the volume of exportable coffee," he told Reuters The 2010/2011 harvest could fall around 15 percent from earlier forecasts to 16.7 million bags due to "unfavourable weather," Deputy Agriculture Minister Diep Kinh Tan was quoted by state media on Tuesday as saying.