Vietnam's coffee discounts tighten on low supply

Discounts for Vietnamese coffee tightened this week on lower stockpile while the market is expected to be more robust in Indonesia as supplies rise when an upcoming harvest season starts, traders said on Thursday. Prices in Daklak, Vietnam's largest coffee bean-growing province, stood unchanged from last week at 47,300 dong-48,000 dong ($2.08-$2.11) per kg as stockpile remained low and as the next harvest season is not due until October.
The 5-pct black and broken grade 2 robusta were quoted at $30-$50 a tonne below the London's ICE May contract, tightening from $30-$90 a tonne last week, as export firms faced difficulties in collecting more beans. "It's hard to buy beans because the stockpile held by farmers now is not enough and only about 25 percent is left," said Pham Ngoc Bang, deputy general director of Dakman Vietnam based in Daklak province.
Torrential and longer-than-expected rain in Vietnam last December also hurt supply and beans quality during the then-drying progress. Vietnam's coffee exports volume this year may drop 20-30 percent annually, an industry official said. "The beans are much darker and of bad quality (due to the rain) and so many of them could not past the premium coffee standards, forcing traders to mix them with better-quality beans which are hard to find," said a trader at a foreign company.
"As beans are hard to buy, exporters were not so keen on making new trade deals," the trader added. In Indonesia, Vietnam's major rival, traders quoted robusta grade 4, 80 defects at a premium of $20-30 a tonne to the May contract, higher than $15-$28 a week earlier, ahead of a harvesting period. The market is quiet, traders said, but they predict trade to pick up slowly in the next two weeks as Indonesian farmers start collecting beans in a small harvest starting late March before they enter the main harvesting season in July. This story now incorporates the previous weekly Vietnam Coffee report.