Asia Coffee-Vietnam market tepid on weak demand, Indonesia premiums narrow

HANOI: Vietnam's coffee belt has been reporting low activity due to weak demand, while the Indonesian premiums narrowed as farmers are expected to sell more beans ahead of Ramadan, traders said on Thursday.

Farmers in the Central Highlands, Vietnam's coffee-growing capital, sold coffee at 32,800 dong-33,500 dong per kg($1.42-$1.45), up from last week's 32,100 dong-32,800 dong.

"Farmers are holding back from selling coffee beans due to unattractive prices," said a trader based in the coffee belt.

"Most farmers plant pepper and coffee trees together. Pepper prices have gained some 30% over the past two weeks so farmers are turning to pepper instead of coffee to cash in."

May robusta coffee settled up $6, or %0.04, at $1,412 on Wednesday.

Traders in Vietnam offered 5% black and broken-grade 2 robusta at premiums of $55-$60 to the May contract, compared with last week's 50-$60 premiums.

In Indonesia's Lampung province, robusta beans premiums narrowed this week, traders in the region said, as they expected farmers to start selling their bean stocks to cash in for Ramadan needs and ahead of the upcoming harvest.

One trader offered $200-$220 premiums to the May contract this week, down from $230-$240 premiums to the April contract last week.

Another trader offered $230 premium to the May contract, down from $250 last week.

"They (farmers) will start selling a lot of the beans in April or during the Ramadan month because there will be a lot of spendings for that month," one of the traders said, adding the main harvest would start in May.

The Islamic fasting month, Ramadan, will start around mid-April and Muslim households in Indonesia typically increase their spending during the festivities of the month and ahead of the holidays at the end of Ramadan.