Vietnam coffee premium seen rising 33% as season-end approaches

Vietnam coffee premium seen rising 33% as season-end approaches

The premium buyers have to pay to obtain coffee from Vietnam, the biggest robusta producer, rose 33 percent over the past week as the 2011-12 season there nears its end, according to Volcafe Ltd.

Vietnamese coffee for July and August shipment was at a premium of $80 a metric ton to the price on the NYSE Liffe exchange in London, the unit of commodities trader ED&F Man Holdings Ltd. said in a report e-mailed today. That compares with $60 a ton last week, data from the trader show.

“Differentials are still very firm, as expected for the time of year,” Volcafe, based in Winterthur, Switzerland, said in the report. “In general, everything has quieted down a little bit for the summer holidays.” A differential is a discount or a premium paid to obtain physical coffee in relation to the price on the futures market.

Rains in growing regions are “consistent” and will help the development of the 2012-13 crop that starts there in October, according to the report. Vietnam will produce 22.4 million bags of coffee in 2012-13, the U.S. Department of Agriculture estimates. A bag weighs 60 kilograms (132 pounds).

Buyers of coffee from Indonesia, the third-biggest robusta producer, are paying a premium of $70 a ton to the exchange price for shipment in July and August, Volcafe data showed. That compares with $50 a ton last week.

“Local exporters are paying up to cover their nearby commitments,” the trader said, adding that there was also “strong demand” from the industry.

Bean arrivals at ports this week were 12,750 tons to 13,500 tons, the trader said. That compares with 11,500 tons to 12,500 tons last week, data from the trader show. Indonesia’s 2012-13 crop is already under way. Harvesting usually starts in April.

“The coffee flow is likely to peak in early August, ahead of the Ramadan festivity,” the trader said.

bloomberg