Coffee trade in Vietnam remains slow this week

Coffee trading in Vietnam, the biggest robusta producer, slowed this week due to higher offers and thin demand, while the harvest in rival Indonesia picked up, traders said on Thursday. Vietnamese robusta grade 2, 5 percent black and broken beans were trading at premiums of $50-$65 a tonne to both London's July as well as September contracts.
Beans grade 1 screen 16 stood at premiums of $110-$130 a tonne. The ICE July robusta contract closed $7 lower, or 0.4 percent, at $1,724 a tonne on Wednesday. Last week, grade 2 beans were quoted at premiums of $50-$80 a tonne to the July contract. "Foreign buyers are not buying, only somebody who is really short may take Vietnamese now," a trader at a foreign firm in Ho Chi Minh City said.
Farmers and speculators have extended hoarding, he said, as domestic prices eased to 36,200-37,200 dong ($1.66-$1.71) per kg on Thursday from 36,300-38,500 dong last week, below the key 40,000-dong level. US coffee roasters have begun replacing beans from Vietnam with Brazil's conilons after they shifted to a rare discount in price to their Asian counterparts, US traders and roasters said.
Vietnam's coffee exports in the first four months of this year dropped 40.7 percent from a year ago to 477,000 tonnes, the country's Customs said on Thursday. But supply of robusta is expected to be ample by year-end, given increasing harvest in Indonesia and improved outlook for Vietnam's 2015/2016 crop, traders said.
Vietnam and Indonesia export around 25 percent of the world's coffee. Following rains last week in the Central Highlands coffee belt, cherries seem to be fine and trees that went dry during March and April have begun to flower, traders said. On the other hand, Brazil's 2015/2016 robusta output is forecast to fall more than 15 percent to 14.4 million bags, a report by the US attache showed.
In Indonesia, the harvest is picking up, with the volume of fresh beans rising above last week's, traders said. Sumatran robusta grade 4, 80 defects were offered at $1,980-$2,000 a tonne this week, free-on-board Lampung, from $1,960-$1,980 a week ago. "While Brazil coffee is taken for the US market, European buyers still prefer Vietnamese coffee," a Vietnamese dealer said, citing lower shipping costs.