Vietnamese coffee farmers and speculators seeking to free up some storage space ahead of the new harvest have reduced their selling price expectations, but price falls on the robusta futures markets have hit sales, traders said on Tuesday. Prices in Vietnam, the world's largest robusta producer, closely track London futures prices, with the ICE November contract closing 0.9 percent lower at $1,627 a tonne on Monday, after hitting a three-month low for the second month of $1,610.
Robusta beans in Daklak, Vietnam's top coffee growing province, fell to 35.7-36.2 million dong per tonne on Tuesday, from 36.3-36.9 million dong a week ago, with farmers holding on to stocks, traders said. Sellers can unload the beans if domestic prices go up to 38 million dong ($1,690) a tonne or above, which is a 5 percent drop from late February when they had begun stockpiling robusta beans at prices of around 40 million dong a tonne, traders said.
"But prices have fallen well below that zone, and farmers are not selling," said a trader in Buon Ma Thuot city, the capital of Daklak. Premiums of Vietnamese robusta beans grade 2, 5 percent black and broken widened to $70-$80 a tonne to the ICE November contract, from premiums of $50-$70 a week ago. "Exporters are not able to buy on domestic markets and foreign buyers are also not bidding," a trader at a European firm in Ho Chi Minh City said.
Differentials often move in opposite direction to coffee futures prices. Given the overall slowing sales this month, coffee shipments in August may fail to hit market expectations of between 100,000-120,000 tonnes, traders said. Traders now estimate that about 80,000 tonnes could be exported in August, after Vietnam's shipment in the first half of the month fell around 20 percent from a year ago to 43,500 tonnes (725,000 60-kg bags), based on Vietnam Customs data.
The total coffee volumes so far in the calendar year up to August 15 stood at 830,000 tonnes, down about 34 percent from the same period in 2014, the data showed. The next 2015/2016 coffee season begins in October, starting with the harvest that often peaks in late November in the Central Highlands coffee belt, and farmers could sell some of the stocks remaining to make room for fresh beans, traders said.