Asia Coffee-Vietnam stocks low; trade picks up in Indonesia

HANOI/BANDAR LAMPUNG, Indonesia - Tightening supply and low global prices limited coffee trade in Vietnam, while healthy demand supported markets in Indonesia, traders said on Thursday.

Workers sort arabica green coffee beans at a coffee mill in Pangalengan, West Java, Indonesia May 8, 2018. Photo: Reuters

Farmers in the Central Highlands, Vietnam’s largest coffee growing area, sold coffee COFVN-DAK at 32,000 dong ($1.38) per kg, unchanged from last week.

“Falling global prices and low stocks have kept the market subdued, with farmers reluctant to release beans, in hopes that tightening supply may eventually support prices,” said a trader based in the region.

“I think trading activities will remain this dull until the at least October.”

Steady rains in the coffee belt of Central Highlands are providing enough water for the upcoming crop, with harvest season expected to start in late October, traders said.

“The weather now is in ideal condition with moderate rains for the trees to grow well,” another trader based in the region said.

September robusta coffee settled up $1, or 0.08%, at $1,192 per tonne on Wednesday.

Traders in Vietnam offered 5% black and broken grade 2 robusta COFVN-G25-SAI at $240 premium per tonne for the September contract, up from $200 premium last week.

Meanwhile, Indonesia’s Sumatran robusta beans are offered with $300-$350 premiums to the September contract this week, compared with last week’s $300 premium, one trader in Lampung province said.

Another trader said beans are being offered with $300-$350 premiums for the August to October contracts, down from $350-$370 premiums last week.

“Big domestic instant coffee makers continue to buy beans but foreign buyers are dominating trade this week,” one of the traders said.

The volume of incoming beans is increasing. One trader estimated the harvest will last until October. ($1 = 23,189 dong)