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Vietnam coffee prices gain, discounts narrow, but trading remains slowWednesday, June 18, 2014 > 08:28:20
HANOI: The gap between Vietnamese coffee prices and London robusta futures narrowed this week, but sales on domestic markets slowed amid plentiful stocks, traders said on Tuesday.
Vietnam, the world's largest robusta producer, has exported around 70 percent of its 2013/2014 crop, which was estimated at a record 29 million bags in a U.S. Department of Agriculture report last month. The next harvest is due to start in October, with the crop year to run through September 2015.
Exporters sought to sell Vietnamese robusta grade 2, 5 percent black and broken beans at par or discounts of up to $20 a tonne to London's September robusta contract, narrowing from par to discounts of $40 a tonne a week ago.
The London September contract firmed by just $1, or 0.05 percent, to end at $1,999 a tonne on Monday.
"Prices are still too expensive ... so it is not possible to buy now," a trader at a foreign firm in Ho Chi Minh City said.
Foreign buyers bid at discounts of $20-$30 a tonne to the September contract late last week. Trade this week has been slow, with almost no bidding, the trader in Ho Chi Minh City said.
Robusta beans rose to 40,000-40,100 dong ($1.89) per kg on Tuesday in Daklak, Vietnam's largest growing province, from 37,800-37,900 dong a week ago.
"Farmers are not selling, partly because they forecast a lower output in the next season," the trader in Ho Chi Minh City said, referring to the 2014/2015 crop year.
Traders that have recently conducted surveys on Vietnam's next 2014/2015 crop, however, have said trees looked good and promise another bumper crop. The traders have yet to make any detailed forecasts on output, saying it was still early.
The traders' assessments for a bumper harvest are in line with a U.S. Department of Agriculture report that forecasts Vietnam's 2014/15 coffee output to rise to 29.2 million 60-kg bags.
One trader, however, estimated output could drop 10 percent to around 27 million bags, citing adverse weather during the February-April flowering period in some growing areas in the Central Highlands coffee belt.
"That is why farmers are holding back stocks, apart from recent price falls," he said.
Traders have estimated stocks in the country at a record of between 300,000-350,000 tonnes, well above the normal stock size of 200,000 tonnes at this time of the year.