Domestic coffee prices in Vietnam fell to between 38.5 million dong and 39.5 million dong ($1,833-$1,881) a tonne on Tuesday, the lowest in more than nine months, in line with global market trends, traders said. The low price also comes before the harvest, which is likely to further weigh on prices by increasing supply.
Robusta beans fell in Daklak, Vietnam's top growing province, tracking coffee futures that sank roughly 4 percent on Monday on selling related to the strong dollar. The price hit 38.2 million dong a tonne on January 28. Vietnam devalued the dong by 8.5 percent on February 11.
Coffee prices have been easing in Vietnam, the world's second-largest producer, in the past month due to dollar fluctuations, weak market sentiment wrought by the European debt crisis and expectations of a bumper harvest in the top robusta exporter. "New beans have not arrived yet, only a small portion of beans came from farmers' early harvest," an exporter in Daklak said.
The early harvest often targets a small number of cherries and is slow because growers have not hired extra labourers for the picking process, unlike when the harvest comes into full swing. The exporter said trading had been slow due to thin availability of new supplies and limited funds from banks.
"Banks have yet to begin lending strongly, waiting for more coffee to arrive, so exporters have not started buying under the stockpiling scheme yet," he said. Vietnamese exporters planned to stockpile at least 300,000 tonnes of coffee to boost prices at the start of the 2011/2012 crop year, which lasts from October 1 to September 30, 2012. Prices on Tuesday had fallen below the 40 million-dong-a-tonne level that the Vietnam Coffee and Cocoa Association used as a unit price to estimate the total funds companies needed from banks to buy beans. Another Daklak-based exporter said his company would start the harvest from this Saturday.
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