HANOI, March 22, 2011 - Vietnamese coffee prices have risen more than 5 percent in the past week, tracking higher prices in London, but sales were moderate as buyers looked at fresh beans from rival robusta producer Indonesia, traders said.
"Prices in Indonesia are competitive so buyers are looking there," a trader at a foreign company in Ho Chi Minh City said.
Robusta in Indonesia was stable in the week ending March 21 at $2,420-$2,440 a tonne, free-on-board (FOB) Lampung, even though the harvest this year is forecast to drop 30 percent from 600,000 tonnes in 2010. In Vietnam, discounts to London's May contract ranged from $80 to $150 a tonne, against $110-$120 last Tuesday, placing robusta grade 2, 5 percent black and broken at $2,463-$2,533 a tonne, FOB basis, from $2,270-$2,280 last Tuesday.
"Prices fluctuate widely on the market, with some exporters agreed to sell at a wider discount (to London) and some unwilling to sell," another trader in Ho Chi Minh City said.
Traders said exporters who need cash for bank repayment and think prices were attractive, offered wider discounts while exporters who don't have immediate repayment needs were not in a rush to sell, so offered narrower discounts.
Vietnam is ending the first half of its October 2010/September 2011 crop year this month, with October-March shipments expected to take up around half of the latest harvest that ended in December, while Indonesia began picking in January.
Vietnam is the world's top producer of robusta beans used mainly for making soluble coffee. Along with Indonesia, the two account for nearly 21 percent of the world's coffee production, based on International Coffee Organization data.
"Exporters are, however, unwilling to sell under July contract because they think it is a bit risky now to deal with shipments too far ahead," the second trader added.
Advised by the Vietnam Coffee and Cocoa Association, the industry body, exporters have been reluctant to sign contracts with forward shipment this year and are sticking more to deals with outright loading to avoid risks, traders said.
On domestic markets, robusta beans jumped 5.4 percent to between 47.5 million dong and 48 million dong ($2,275-$2,299) a tonne on Tuesday, from 45.1-45.5 million dong a week ago.
Prices in Vietnam closely tracked London's robusta futures market where May contract ended $17 up at $2,613 a tonne on Monday. Vietnamese domestic coffee prices have advanced 28.7 percent so far this year after surging 56 percent in 2010.
Exports from last October to March may reach at least 10.58 million bags, based on government data [ID:nHAN540998] and traders' estimates , making up 53.6 percent of the 19.75-million-bag harvest estimated in a Reuters poll on March 1. One bag contains 60 kg of coffee beans. ($1=20,880 dong)******
