Vietnam Coffee Discount Seen Narrowing on Lower Bean Supplies

22/10/2012
 
Vietnam Coffee Discount Seen Narrowing on Lower Bean Supplies
BLOOMBERG (USA)
 
Buyers of coffee from Vietnam, the world’s biggest producer of the robusta variety, are getting a smaller discount for their beans due to reduced supplies and lower futures prices, according to Volcafe Ltd.

Vietnamese beans for shipment in November and December were trading at $10 a metric ton below the price on the NYSE Liffe exchange, Volcafe, the Winterthur, Switzerland-based coffee unit of commodities trader ED&F Man Holdings Ltd., said in a report e-mailed today. That compares with a discount of $30 a ton last week, data from the trader showed.

Harvesting of Vietnam’s crop is set to start by the middle of next month, leaving availability limited for now, Volcafe said. Robusta coffee fell 1 percent this week through yesterday on the NYSE Liffe exchange in London. The futures for January delivery rose 0.9 percent to $2,066 a ton at 12:23 p.m.

There is “good interest from all sides for Vietnam new crop and first quarter 2013,” the trader said. “As the crop is not yet available, the internal market lacks liquidity and differentials remain firm also due to the lower Liffe market.”

The weather in Vietnam has been favorable for harvesting, according to the report. Producers there may gather 26 million bags of coffee in the 2012-13 season that started this month, down from a record 27 million bags last season, Volcafe estimates. A bag of coffee weighs 132 pounds.

Indonesian Premiums

In Indonesia, the world’s third-biggest robusta grower, buyers are paying a bigger premium as the 2012-13 crop approaches an end, according to the report. Indonesian coffee was $30 a ton above the exchange price, up from $10 a ton a week earlier, data from the trader showed.

“Differentials increased as a result of less coffee available and exporters paying higher prices,” Volcafe said, referring to the discount or premium paid to obtain physical coffee in relation to the price on the futures market.

Coffee deliveries from farms in Indonesia fell to 1,000 tons to 1,200 tons this week from 1,300 to 1,600 tons a week earlier, data from the trader showed. Bean exports from the port of Panjang were 53,190 tons last month, up from 10,216 tons a year earlier, according to the report.

In India, Asia’s third-largest coffee grower, the new crop will start in six weeks, earlier than usual, after rain accelerated bean development, Volcafe said.