Vietnamese robusta coffee have risen around 6 percent in the past week to a new record high following gains in global market, prompting farmers to further hold back sales, traders said on Tuesday. Robusta beans rose to new all-time highs of between 44.5 million dong and 45 million dong ($2,132-$2,156) per tonne on the domestic market, from 42.2 million dong a week ago, which was itself a record.
Liffe May robusta coffee closed up $32 at $2,337 a tonne on Monday after peaking at a 2-1/2 year high for the second month of $2,358. The market was supported by a surge in arabica prices. An increase of 20.6 percent since the end of 2010 has brought local prices in Vietnam, the world's largest producer of robusta beans, closer to the level of 50 million dong per tonne at which farmers are expected to unload more beans, traders said.
"They still hold 30 percent of the crop and are not selling," an exporter in the key growing province of Daklak said, based on his output estimate of 1 million tonnes, or 16.67 million bags. Vietnam has shipped 300,000 tonnes and another 400,000 tonnes were kept in warehouses of foreign buyers and exporters, he said. His estimate is well below an International Coffee Organisation's data of 18.43 million 60-kg bags.
DONG DEVALUATION: The all-time high is in local currency terms. The dong was devalued by 8.5 percent against the dollar on February 11. Vietnamese robusta beans grade 2, 5 percent black and broken rose to $2,240-$2,250 a tonne, free-on-board, from $2,135-$2,145 last Tuesday, as discounts to London's May contract stood unchanged at $140-$150 a tonne. Higher prices have prompted farmers to slow sales, a trader in Ho Chi Minh City said. Prices have nearly doubled from 22.5 million dong per tonne in Daklak on February 23, 2010. The province accounts for about a third of Vietnam's total coffee.
WATERING UNDER WAY: Farmers in the Central Highlands coffee belt are due to start a second phase of tree watering soon for the 2011/2012 crop. The watering process and fertiliser feeding often last from February to early May before the rainy season returns to the area, which produces about 80 percent of Vietnam's coffee.
The region is forecast to face a severe drought this year, which could affect coffee output, the ruling Communist Part-run Nhan Dan (People) daily quoted the Agriculture Ministry as saying. It gave no forecast damages. The watering process, in three or four phases of around 20 days at a time, is essential to coffee flowering as it helps trees cope with the peak of the dry season in March.
Vietnam's coffee crop year lasts from October to September, starting with a four-month harvest. Initial reports said some cherries did not contain solid beans inside, suggesting the next crop may not be good, Chairman Luong Van Tu of the Vietnam Coffee and Cocoa Association said last week in his first comments on the next crop. Growers were scrambling for diesel to run water pumps as many fill-in stations in the Central Highlands have suspended sales or stopped selling diesel and only offered petrol in preparations for a retail price hike, state-run media reported. "Now the fuel shortage is not really the farmers concern because coffee prices are high. Their attention is the extent of the price rally," the Daklak-based exporter said.
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