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Vietnam coffee stocks at record high, trade dullWednesday, October 01, 2014 > 10:53:14
Trading on Vietnam's coffee export market has slowed ahead of the 2014/2015 crop as traders and buyers waited for more clues on the upcoming harvest after estimates of record carryover stocks in the next crop year, traders said on Tuesday.
Vietnam's huge stocks could provide relief to prices after the International Coffee Organization and industry analysts expected a drop in global production.
Vietnam, the world's largest robusta coffee producer, produced 28 million 60-kg bags in the 2013/2014 crop year ending on Tuesday, up from 25 million bags in the previous season, based on a Reuters poll.
Traders in Vietnam said the crop yielded up to 30 million bags.
The Southeast Asian nation began the current crop year with some 200,000 tonnes (3.33 million bags) in stock carried over from the previous seasons, based on traders' estimates.
"Trading has slowed, and export firms do not send out quotations lately, waiting for the new season to begin," a trader at a European firm in Ho Chi Minh City said.
Vietnam may bring forward to the next 2014/2015 crop year more than 300,000 tonnes (5 million bags), a record high, despite a jump in its shipments this year, traders said.
The carryover stocks included some 200,000 tonnes in Ho Chi Minh City-based warehouses, about 100,000 tonnes held outside the city plus a small volume kept by growers, traders said.
The beans carried over are often used for loading in October and early November before harvesting of the next crop peaks from the second half of November. The 2014/2015 crop season lasts until Sept. 30, 2015.
2013/2014 EXPORTS JUMP 15 PCT
Vietnam exported an estimated 1.64 million tonnes (27.33 million bags) of coffee, also a record high, between October 2013 and this month, up 15.5 percent from a year earlier, based on government statistics.
"Farmers' stocks are tiny, but it is difficult to measure the size," a Vietnamese trader said from the central highland province of Dak Nong. The Central Highlands region produces around 80 percent of Vietnam's coffee.
On Tuesday, robusta stood at 39,000-39,200 dong ($1.84-$1.85) per kg, up from 38,400-38,600 dong a week ago, tracking a gain on London's futures market where the November contract ended up 0.4 percent at $1,963 a tonne.
A year ago the beans were priced at 35,300 dong per kg in Daklak, Vietnam's largest growing province. Sales could pick up if prices rise beyond 40,000 dong per kg, traders have said.
Discounts on robusta grade 2, 5 percent black and broken beans for loading in October/November stood unchanged at $30-$40 a tonne to the November contract, while shipment in December onwards were quoted at discounts of $55 a tonne.
Bids by foreign buyers ranged at $70-$80 a tonne.
"Vietnamese exporters are now reluctant to sign deals for shipments to far ahead, as they fear changes in futures prices", the trader in Dak Nong province said.
Any rise in coffee futures prices could pull along prices in Vietnam, which in turn will make it tough for Vietnamese exporters to buy on domestic markets without facing losses.
The next 2014/2015 crop is forecast to yield 27.5 million bags, based on a Reuters poll in July, but Vietnam-based traders said they expected another bumper harvest.
"Farmers were not expecting young cherries to last due to rains, but now the cherries are still on trees and have become bigger," the second trader said.