* Vietnam coffee soars 87 pct y/y to all-time highs
* Discounts widen slightly
* No rush for sales - Daklak coffee grower
* 2011/2012 global deficit seen at 4 mln bags
HANOI, Feb 16 (Reuters) - Vietnamese robusta coffee on the domestic market jumped to as high as 42.2 million dong ($2,021) a tonne on Wednesday, breaking earlier records and prompting more growers to hold on to stocks.
The slowing sales in Vietnam, the world's second-largest producer after Brazil, has helped push London robusta futures market prices through a 2-1/2-year barrier on Tuesday.
Prices in Vietnam reached all-time peaks of between 41.8 million and 42.2 million dong <VND=VN> per tonne in the key growing province of Daklak, an 87 percent surge from a year ago and up from 41.3 million dong on Tuesday, when farmers already curbed sales.
Given the rise in London, discounts of Vietnamese robusta grade 2, 5 percent black and broken beans to Liffe May contract <LRCK1> widened to $150-$160 a tonne on Wednesday, from $145-$150 on Tuesday.
"Farmers keep holding on to their beans as long as prices rise. The higher the price, the tighter the hold," a trader in Ho Chi Minh City said.
"They could start selling only when prices reverse the uptrend."
Rising prices not only encourage farmers in the Central Highlands coffee belt to hang on to their stocks, but also mean that they can sell fewer beans and still have sufficient cash for expenses, traders said.
"We are determined to keep coffee because prices are forecast to rise more due to a global deficit," a coffee farmer in Daklak told Reuters by telephone.
Farmers' moves to curb sales despite a harvest of 18.43 million bags -- twice the volume of robusta that rival Indonesia could pick based on ICO data -- are making global markets more nervy, amid strengthening demand by roasters and funds for robusta and rising prices of the beans since late 2010.
In Indonesia, the discount for Sumatra's robusta bean held firm this week, as the main harvest -- which will start in March-April -- has not peaked yet and exporters are still on the sidelines.
Indonesia's grade 4 80 defect is offered at a discount of $50 to London's May contract, up from $70 last week. Local prices of Sumatra beans grade 4 80 defect were at 18,500-19,000 on Wednesday, up from around 18,150 rupiah per kg last week. [COFFEE/ASIA1]
"Exporters are still waiting for more beans to flow in before they offer contracts from the new crop. They are a bit cautious after last year's crop was not so good because of the weather," said a trader in Bandar Lampung on Sumatra island.
"So any beans that are flowing now are taken by local roasters. Exporters only buy enough to cover existing contracts."
GLOBAL DEFICIT
The global coffee balance is projected to be in deficit in 2011/12 with a crop of around 131 million 60-kg bags and consumption of 135 million, coffee information firm CoffeeNetwork said last Friday.
Daklak's data showed it produced 403,000 tonnes, or 6.72 million bags, of coffee in the harvest that ended in late December, up about 6 percent from the previous crop and which made up a third of Vietnam's total output [ID:nHAN187315].
The Daklak-based farmer said he picked nearly 4 tonnes of coffee from his farm, and was now firmly holding on a stock of 3 tonnes after having repaid part of the harvest to the coffee company which leases the land to him.
"I am not selling yet, and we do not really have to sell the fresh beans while we still have enough cash for the next production," he said.
The farmer was referring to the process between now and early May when growers need to water coffee trees in three or four phases, each lasting about 20 days, and to feed them with fertiliser. The next harvest is due from late October.
Vietnam's onshore prices as of Wednesday have risen about 13 percent so far this year, after jumping 56 percent in 2010.
In the past farmers had to sell coffee at this time of year to get cash for fuel and fertiliser. But a higher price so far in the current 2010/2011 crop year has helped them avoid selling much, making it difficult for exporters to fill their loading needs, traders said.
The coffee crop year in Vietnam, the world's second-largest producer after Brazil, lasts between October and September, starting with a four-month harvest.
Previously prices in Vietnam recovered to 41 million dong per tonne in March 2008, from the historical low of 3 million dong in early-October 2001 when world prices plunged to life-time lows due to bumper crops in major producers such as Brazil and Vietnam. ($1=20,880 dong) (Additional reporting by Fitri Wulandari in JAKARTA; Editing by Ramthan Hussain)
((ho.minh@thomsonreuters.com; +844 3825 9623; Reuters Messaging: ho.minh.reuters.com@reuters.net)) ((If you have a query or comment on this story, send an email to news.feedback.asia@thomsonreuters.com))
