HANOI, March 29, 2011 - Some traders in Vietnam said taht they still hold the tight domestic supply even the price has dropped nearly 6 percent on this week. They (speculants) still wait the price rebounds.
Most coffee farmers have sold out their stocks to export firms and buying agents, who are better financed and often hold back beans for speculation, as Vietnam has nearly ended the first half of its 2010/2011 coffee crop.
"Vietnam now still has around 20-25 percent of the crop left in the country," a trader in Ho Chi Minh City said after conducting a field trip to survey on production in the Central Highlands.
As such, the current stock level in the country would be equivalent to 3.95-4.94 million 60-kg bags, going by a crop output of 19.75 million bags found in a Reuters poll on March 1.
Coffee exports between October 2010 and this month, the first half of the 2010/2011 crop year, would reach an estimated 13.32 million bags, government statistics showed, up 28.4 percent from the corresponding period a year ago.
"While export prices fall, domestic prices are still high and there is much speculation now," another trader at a foreign company in Ho Chi Minh City said.
He estimated the current stock at 6.67 million bags, half of which was in the hands of foreign firms operating in Vietnam, while another 1.67 million bags are kept by exporters and the rest held by farmers and speculators.
DEVALUATION FEAR
"Rich people do not like to sell (coffee) now, they are waiting for prices to rise," the first trader said, adding that fears the government may move again this year to devalue the currency lead many to hold onto physical assets like coffee.
Vietnam conducted a major devaluation of the dong, its non-convertible currency, by 8.5 percent against the dollar in February. [ID:nSGE71905S]
The market in Vietnam, the world's top robusta producer, has switched to using London's July contract for pricing as roasters have their purchase well covered for May, traders said.
($1=20,865 dong) ------
