Vietnam's coffee exports slow; prices fall

Vietnam's coffee exports slowed this week on thin stocks and falling prices in London markets from recent peaks, and exports this month could fall by up to a third from May following strong loading earlier this year, traders said on Tuesday. June's coffee exports would drop to between 65,000 tonnes and 80,000 tonnes, or 1.08 million to 1.33 million bags, from 110,000 tonnes in estimated shipments last month, traders said.
"High prices attracted a large volume of coffee earlier this year and the remaining stocks are not high," a trader at a European firm in Ho Chi Minh City said. Coffee farmers in Vietnam, the world's largest robusta producer and exporter, have invested more in the current crop as domestic prices hit multi-year highs in the first quarter of 2011 on concern over tight global supply. Vietnamese robusta prices, which closely track London futures, then rose to a life-time high of 51.9 million dong ($2,522) a tonne on May 11 in the Central Highlands coffee belt, up nearly 40 percent from the end of 2010.
The price rise has encouraged exporters to hasten their domestic purchases and outbound shipments, having loaded 160,600 tonnes of coffee in March. The volume declined to 126,200 tonnes in April and dropped further last month. May coffee exports rose an estimated 10.6 percent from the same month in 2010 to 110,000 tonnes, or 1.83 million bags, exceeding market expectations, the government said on May 25.
Lower shipment volumes from Vietnam, along with an expected fall in output in Indonesia, the world's second-biggest robusta producer, could tighten supplies of the bitter variety in the coming weeks. Vietnam may enjoy high coffee prices in the second half of the year despite higher domestic output in the world's top robusta producer, as inclement crop weather in some growers and a bad harvest in Indonesia triggers concerns about yields and quality.
Domestic prices could rise to 55-60 million dong ($2,672-$2,915) a tonne in second-half 2011 on tight global supplies, the Agriculture Ministry said last Wednesday. "The people who still hold coffee in stock now have decided to wait after they heard about the price forecast, thus trading has slowed in the past week," a trader said from Buon Ma Thuot, the capital of Vietnam's top coffee growing province of Daklak.