Vietnam coffee-sales slow despite high prices

Vietnam’s coffee exports are expected to fall this month by around a fifth from a year ago as stocks from the old crop are dwindling and rain has delayed the new crop, traders said on Tuesday.

Nov 9 – Vietnam’s coffee exports are expected to fall this month by around a fifth from a year ago as stocks from the old crop are dwindling and rain has delayed the new crop, traders said on Tuesday.

They said exporters were also reluctant to seal new deals for nearby shipment as rising prices on the London robusta futures market could bring them losses, and that might result in shipment delays and defaults in the first quarter of next year.

When London prices are rising, exporters cannot guarantee they will be able to buy beans locally in future at the price they fix for exports.

London January robusta coffee ended $60 higher at $2,046 per tonne on Monday after hitting a two-year peak of $2,058, supported by concern about rain in Vietnam, which is the world’s biggest producer of robusta.

“Prices have increased a lot, which could be dangerous to exporters when they come to buy beans locally for loading,” a Vietnamese exporter in Ho Chi Minh City said.

Vietnam could load between 60,000 tonnes and 70,000 tonnes of coffee, or 1.0-1.17 million bags, this month, down from the 81,600 tonnes shipped in the same month last year, traders said.

A drop in shipments is expected as most of the stock carried forward from the 2009/2010 season was loaded last month, totalling an estimated 70,000 tonnes, while harvesting of the new crop has been delayed by rain, traders said.

Rain is likely to persist in Vietnam’s Central Highlands coffee belt throughout this month and the rainy season is expected to end a month later than usual in late November, a state forecaster said on Monday.

Exporters widened their discounts on offer prices to the January contract to $150-$170 a tonne this week from $130-$140 a week ago for robusta beans grade two, 5 percent black and broken, placing them at $1,976-$1,996 a tonne, free-on-board basis, from $1,758-$1,798 last Tuesday.

“Buyers are not in the market for beans with January shipment any more as they are concerned over supply problems,” said a trader from Buon Ma Thuot, the capital of Vietnam’s top coffee growing province of Daklak.

He said that buyers were switching to using London’s March contract, bidding a discount of $160 a tonne, but that Vietnamese exporters were reluctant to sell for shipments that were too distant.

On Tuesday Daklak was overcast and cold, discouraging farmers from going to their farms for harvesting and drying, the trader said. Rain had slowed the ripening of coffee cherries, and less than a third of the crop was mature, he said.

“Some poorer farmers are still trying to pick cherries and sell to buying agents after drying the beans by coal or wood, but the volume is very small,” he said. – Reuters

Tags: Vietnam Coffee, vietnam coffee exports