Lower global prices have put a brake on coffee sales in Vietnam, prompting foreign buyers to switch to supplies of fresh beans from Indonesia, where the harvest is picking up pace, traders said on Thursday. High stocks in top robusta producer Vietnam and in European ports have contributed to thin buying interest, and the ample supply could push prices down further when Vietnam begins its harvest in October, traders said.
The ICE September robusta contract closed down $13, or 0.7 percent, at $1,771 a tonne on Wednesday and arabica futures also fell as the currency in top producer Brazil dropped. "Buying on domestic markets has slowed due to price falls," said an exporter in Buon Ma Thuot, the capital of Vietnam's main growing province of Daklak.
Stronger sales in the second half of June as prices neared the key level of 39,000 dong ($1.79) per kg contributed to boosting the month's export volume by 2.5 percent from a year before to 110,000 tonnes. That year-on-year rise was the first since November 2014. Premiums of Vietnamese robusta grade 2, 5 percent black and broken widened to $30-$50 a tonne to the ICE September contract from $25-$30 a tonne last Thursday.
Grade 1 beans, screen 16 stood at premiums of $90-$110 a tonne. Although sales slowed in Vietnam, the coffee flow is picking up in Indonesia, including exports and the volume of fresh cherries arriving from the harvest, according to traders and government data. Coffee exports in June from the main growing area of Sumatra rose 22 percent from a year earlier to 21,890 tonnes, government data showed.
June shipments took Indonesia's coffee exports in the first quarter of the current crop year to 59,590 tonnes, a surge of 52 percent from a year before. Indonesia's crop year lasts from April to March, while the season runs from October to September in Vietnam. Sumatran robusta grade 4, 80 defects eased to $1,880-$1,900 a tonne, free-on-board Lampung, from $1,900-$1,920 a week ago. Indonesia's coffee prices are roughly on a par with Vietnamese beans and buyers therefore tend to opt for the fresher Indonesian robustas as the harvest in Vietnam ended in January.