SINGAPORE, April 20, 2011 - Indonesia robusta beans stayed at premiums to London futures as purchases from domestic roasters stirred up trade, while Vietnam could be under pressure from the prospect of a bigger output in the next crop, dealers said on Wednesday.
Sumatran robusta beans Grade 4, 80 defects, were steady at $20 premiums to the July contract . Vietnam's beans were at a discount of $60 to $70 London futures, but farmers were reluctant to sell as they waited for a further rebound in the international market.
"I think the Vietnamese will regret playing hard to get if it's true production will be bigger. You do have offer of beans, but it's not at the right differentials," said a dealer in Hong Kong, who buys Vietnamese beans.
"In my opinion, the discount should be at least $120 or $140."
Vietnam's 2011/2012 crop is forecast to produce 22 million bags, up 10 percent from the current crop after higher prices spurred investment in the world's largest robusta producer, an analyst at CoffeeNetwork said.
It exported 13.32 million bags of coffee between October 2010 and March, or 67 percent of the 2010/2011 crop of 20 million bags, based on traders' estimates. April's loading is expected to drop below 100,000 tonnes.
ICE July arabica coffee rose to a 34-year high of $2.9680 per lb on Wednesday, while Liffe July robustas were up more than 1 percent at $2,479 a tonne.
Physical trading in Indonesia, the world's second-largest robusta producer after Vietnam, was dominated by purchases from roasters on the island of Java, while supply was tight after erratic weather hit the harvest.
"Some trading houses are actually in the market but we haven't struck any deals because our coffee is at a premium. Vietnamese beans are of course cheaper. I think buyers still have more interest in Vietnamese beans," said a dealer in Indonesia's main growing island of Sumatra.
"The premium has been steady because there are not many beans here. Also, local roasters are so aggressive."
Harvests in Sumatra usually begin in March or April, but farmers have been picking cherries since January as the flowering season began earlier in some areas. The previous crop ended last August.
Thin supply had forced Indonesian exporters to stockpile 120,000 beans last year and gradually release them early this year as prices improved, boosting exports in March.
WEEKAHEAD
Dealers expected Indonesian beans to stay at premiums in coming weeks as the early harvest raised fears there would not be much beans left when the crop usually hits its peak in May.
"I would say the premium will stay at around $20 in May, but after that, it can easily reach $50," said the dealer in Sumatra.
The Indonesian Coffee Exporters Association expects production at the world's second-largest producer of robusta to fall by 30 percent this year from an estimated 600,000 tonnes in 2010 after rain in key producing areas damaged cherries.
Source : Reuters
