Asia Coffee-Indonesia premium narrows on rising supplies; Vietnam domestic prices steady

HANOI/BANDAR LAMPUNG, Indonesia - Vietnam’s domestic coffee prices held unchanged from a week earlier on Thursday capped by weak demand, while Indonesian premiums narrowed due to abundant supplies.

A man pours coffee beans to a grinder at a shop in Hanoi July 16, 2013. Vietnam's coffee exports in June fell 37 percent from a year ago to 88,387 tonnes, the Vietnam customs department said on Tuesday, below market expectations. Photo: Reuters

Farmers in the Central Highlands, Vietnam’s largest coffee growing area, sold coffee at 32,000 dong ($1.38) per kg, flat from a week earlier.

“Though domestic supplies are running low, prices cannot increase as buyers are focusing their purchases from Brazil, where a harvest is going on,” said a trader based in the Central Highlands province of Dak Lak.

Traders said baby coffee beans at farms in Vietnam are growing well thanks to good weather conditions, promising a bumper harvest that will begin in October.

Traders in Vietnam offered 5% black and broken grade 2 robusta at a $200-$220 premium per tonne for the September contract, down from a $240 premium last week.

September robusta coffee settled up $11, or 0.9%, at $1,226 a tonne on Wednesday.

Vietnam’s coffee exports in the first half of this year rose 2.2% from a year earlier to 941,057 tonnes, government customs data released this week showed.

Meanwhile, Indonesia’s Sumatran robusta beans were offered with $250-$280 premiums to the September contract this week, narrowing from last week’s $300-$325 premium, a trader in Lampung province said.

“The price edged down this week because of the increase in supplies during the main harvest season,” the trader said. “But demand from exporters remains strong.”

Another trader said beans were being offered with a $330-$350 premium for September to October contracts, slightly firmer than a $300-$350 premium last week.