Vietnamese coffee prices on Tuesday hit to their highest level in nine weeks, trailing gains in the London futures market, even though harvesting in the world’s top robusta producer had been two-thirds completed, traders said on Tuesday. Robusta rose to 35,000-35,500 dong ($1.66-$1.68) per kg on Tuesday in Daklak, Vietnam’s largest coffee growing province, from 33,900 dong on Monday and 33,300-33,500 dong a week ago, tracking global futures prices the previous day.
Liffe March robusta closed up $29, or 1.7 percent, at $1,723 a tonne on Monday, settling above the 100-day moving average, which was at $1,695 on Monday, for the first time since May.
"The price gain gives farmers a hope of more rises so they are selling slowly," said a trader in Buon Ma Thuot, the capital of Daklak.
Prices this week neared October 15 levels when beans stood at 36,500 dong per kg in Daklak, based on Reuters data. Except poor families that have to sell up to 80 percent of their crop to cover expenses, most coffee farmers are still holding back beans, hoping prices could rise to 40,000 dong per kg, a price last seen in mid August, traders said.
"The harvest is going smoothly, with sunshine helping farmers’ drying well, but there are more smaller beans than last year," the Buon Ma Thuot-based trader said.
He estimated the ratio of Screen-16 beans – the medium size – could be 45 percent of the total harvest this year, from around 60 percent in the previous 2012/2013 season.
Traders first talked about smaller beans at the start of the crop, saying trees had suffered from a serious dryness in March during the dry season, but they had hoped beans would be larger at the harvest peak.
"Now it is real that beans are smaller, but the problem does not affect the bean quality," another trader in Ho Chi Minh City said, adding that with more smaller beans, Vietnam’s output may turn out to be below previous expectations.
Traders, however, said they have yet to revise down the 2013/2014 crop output, which many have projected to rise to between 29 million and 30 million 60-kg bags, from 25 million bags in the previous season. Vietnam’s crop year is between October and September. Traders estimated between 60-80 percent of the country’s coffee crop has been harvested.
While more fresh beans are arriving, most coffee to be shipped from Vietnam this month could come from warehouses owned by foreign firms as exporters do not have high stocks due to farmer’s slow sales and limited finance, traders said.
Vietnam’s coffee exports this month are expected to rise from November to 100,000-150,000 tonnes, but which would still be below 162,500 tonnes shipped a year ago.
With London futures advancing, the differential of Vietnamese coffee narrowed this week.
Exporters offered robusta grade 2, 5 percent black and broken at a premium of $20 a tonne to London’s March contract , down from a premium of $40/tonne a week ago, while deals could be signed at par to a premium of $10 to the March contract.
Copyright Reuters, 2013