Indonesian Coffee Premium Shrinks After Deliveries to Ports Rise

10/07/2012
 
Indonesian Coffee Premium Shrinks After Deliveries to Ports Rise
BLOOMBERG (USA)
 
Buyers of coffee from Indonesia, the third-biggest robusta producer, are paying a smaller premium for their beans, with deliveries to ports increasing, according to Volcafe, the coffee unit of ED&F Man Holdings Ltd.

Indonesian coffee for shipment in July and August is $50 a metric ton more than the price on the NYSE Liffe exchange in London, the Winterthur, Switzerland-based trader said in a report e-mailed on July 6. That compares with a premium of $70 a ton a week earlier, the report showed.

Bean arrivals at ports were 11,500 tons to 12,500 tons in the week ended July 6, the trader said. That compares with an estimate of 10,000 tons a week earlier, Volcafe said on June 29. Indonesia will produce 9.7 million bags of coffee in the 2012-13 season that started there in April, up from 8.3 million bags a year earlier, according to the U.S. Department of Agriculture. A bag of coffee weighs 132 pounds.

“Trade houses have been quite aggressive in filling their warehouses,” Volcafe said in the report. “Local roasters are also actively participating to meet rising domestic demand during the Ramadan celebration.”

Consumption of staples usually climbs during Ramadan as followers break daylong fasts with communal meals. Ramadan starts in the third week of July this year.

In Vietnam, the biggest robusta grower, beans for July and August shipment were $60 a ton above the exchange price, unchanged from the previous week, Volcafe said. The price paid to farmers reached the season’s high of 43,500 dong ($2.08) a kilogram, according to the report.

“It feels that farmers are doing little spring cleaning trying to clear their warehouses,” Volcafe said. “Demand has slightly slowed down and first inquiries for new crop are popping up.”