Premiums for higher grade Vietnamese robusta edged up this week to offset declines in London futures, while beans from Indonesia's previous harvest were still in demand despite hefty premiums, dealers said on Thursday.
A bumper harvest was underway in top robusta producer Vietnam, but financial constraints faced by local exporters as a result of tighter bank credit led to slow sales, while farmers also waited for global prices to rise to $2,000.
Vietnam's grade 1, screen 16 robusta, a variety imported by Indonesian roasters due to tight domestic supply, was quoted at premiums of $150 to $160 above London's March contract, having been offered at zero premiums in early December and traded at $50 to $60 above futures in November.
"People have been expecting the differentials to widen, but that's a foolish hope. The market is not supportive, that's why they are still holding back on beans," said a dealer in Bandar Lampung, the provincial capital of Lampung in Sumatra.
"In October, we could get beans at $30 to $50, but you have to remember that the market was still at around $2,000. We've heard from our office in Vietnam that the Vietnamese are holding back on stocks." March robusta coffee on Liffe slipped $19 to finish at $1,868 a tonne on Wednesday, tracking declines in other soft commodities. The contract had plunged to a 1-year low in November.
Roasters on Indonesia's island of Java have turned to beans from Vietnam after bad harvests in the main growing island of Sumatra earlier this year caused supply scarcity which propelled premiums for grade 4, 80 defect beans to a record of $550 in August.
There were no reports of fresh purchases of Vietnamese robusta by Indonesian roasters, but dealers noted inquiries for beans from the previous Sumatran crop. Grade 4, 80 defect beans were being offered at $260 to $300 a tonne premium to March contract, up from $200 last week. The new harvest in Indonesia, the world's second-largest robusta producer, will start later in December or in January, but beans were already offered at $100 a tonne to London's May contract for delivery from April onwards.
No deals were reported "Beans from the old crop are still available, but there are not many and the price is still very high," said the dealer in Bandar Lampung. "There are a few deals for the old crop." The International Coffee Organisation (ICO) has revised up its coffee output projection for the current 2011/2012 crop from Indonesia, the world's third-biggest producer, but lowered its forecast for Colombia.
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