Asia Coffee-Vietnam market lacklustre as container crunch weighs

HANOI — Coffee trading in Vietnam was tepid as a shortage of containers in the country sent freight rates soaring, while crimping demand, a trader said, with Indonesian market also being muted due to holidays.

Roasted coffee beans are seen at the coffee company of Simexco Dak Lak Limited in the town of Di An in Binh Duong province, Vietnam July 8, 2019. Picture taken July 8, 2019. Photo: Reuters

Farmers in the Central Highlands, Vietnam's coffee-growing capital, sold coffee at VND33,200 ($1.44) per kg, slightly lower than VND34,000 last week.

“A shortage of containers has made it difficult for traders to ship beans to their customers. Freight (rates) have skyrocketed at least five times higher,” said a trader, who is based in the coffee belt.

“Trading activities, therefore, are very tepid. This problem will persist until at least after the Lunar New Year holiday, which falls in mid-February.”

Traders said the fact that coffee exports in December from Vietnam would likely drop 54.7 percent to 85,000 metric tons, according to official figures, was mostly due to the shipping container crunch.

“There is still demand from buyers who need to stock up for holidays but roasters are not looking to buy,” said another trader, who is based in Ho Chi Minh City.

March robusta coffee settled $7 lower at $1,376 per metric ton on Wednesday.

Traders in Vietnam offered 5 percent black and broken grade 2 robusta at a premium of $135-$145 to the March contract, higher than last week's $100.

Coffee exports from Vietnam is likely to drop 8.8 percent to 1.511 million metric tons in 2020, or equivalent to 25.2 million 60 kg bags, the country’s General Statistics Office said.