Asia Coffee-Roasters buy Vietnam beans; Indonesia oversold
Asia Coffee-Roasters buy Vietnam beans; Indonesia oversold
Robustas from Vietnam changed hands at discounts to London futures this week as its harvest progressed while tight supply and sporadic demand from exporters kept Indonesian beans at premiums for prompt shipment, dealers said on Thursday.
Indonesia's coffee output could rise nearly 13 percent in the year to September 2013, fuelled by improving weather, while rising demand from local roasters is likely to boost consumption and push up imports, a Reuters survey showed.
Indonesia is the world's second-largest robusta producer after Vietnam, and the two together account for about 23 percent of global output. Robusta is either blended with arabica beans for a lower-cost brewed coffee or processed into instant coffee.
"The prices for Indonesia are all over the place. I guess that's because they are also oversold. Everybody is trying to sell the beans at different prices," said a dealer in Singapore, who trades Indonesian and Vietnamese robustas.
"I've sold 80 defect beans at $120 premiums including freight. The London market is also very volatile right now," he added.
Other dealers said Sumatran grade 4, 80 defect beans changed hands at premiums of up to $80 to London's January contract , which has slipped more than 10 percent since hitting a 2-month high in early October on worries about ample global coffee supply. Premiums stood at $40 last week.
"There are not many people who dare to offer beans aggressively. You may get beans at $50 premiums minimum. I would think differentials will get firmer again next week," said another dealer.
"But I think people are buying hand-to-mouth at this price level. It's very expensive compared to Vietnamese beans."
The extended harvest has just ended in Indonesia's main growing island of Sumatra, while last year it finished around August. Heavy rain damaged the crop in the 2011/12 season, causing a severe supply shortage that sent premiums to record highs of $550 last year.
A minor crop is expected to start in December ahead of the main harvest in April next year. Indonesia and Vietnam account for about 23 percent of global output, according to the International Coffee Organization.
The new harvest is under way in Vietnam and is expected to peak in mid-November. The previous 2011/12 crop ended with a record-high output of about 1.6 million tonnes.
"We've bought Vietnamese beans at minus $40 and $50. The Europeans are buying but, to be frank, most other roasters are already well covered," said the first trader in Singapore.
"We are also trying to build up a long position. We have people still looking for prompt shipment. We are not interested in selling forward months."
Vietnam, grade 2, 5 percent black and broken beans were last week offered at discounts of $50 a tonne below London's January contract.
WEEKAHEAD
Indonesia premiums could rise further next week if London futures extend losses, but discounts could widen in Vietnam as more beans enter the physical market.
Coffee prices in Vietnam's domestic market fell to 38,900-39,100 dong ($1.87-$1.88) per kg on Thursday, their lowest since early May, traders said, possibly triggering some sales from growers.
January robusta coffee futures settled down $15 at $1,968 a tonne on Wednesday, after touching $1,965 earlier in the session, the lowest level for the second month since early June, due to pressure from Vietnam's crop.
New York arabica futures, which often dictate robusta, closed down 2.55 cents at $1.5465 per lb because of selling from top grower Brazil. (Editing by Joseph Radford and Robert Birsel)
reuters
