Vietnams local coffee prices drop, Indonesia premium tightens

Vietnam's domestic coffee prices fell due to new harvest supplies

H'Gai collects coffee beans at her coffee garden outside Vietnam's Central highland Buon Ma Thuot city October 24, 2006. Photo: Reuters

Vietnam's domestic coffee prices fell due to new harvest supplies, while the market in Indonesia remained lacklustre, traders said on Thursday.

Vietnam, the world's second biggest coffee producer, is in its peak harvest season, supported by sunny and dry weather in the Central Highlands, the country's coffee belt, traders said.

Vietnam's national centre for weather forecasting said the coffee belt regions would mostly be sunny for at least another week, which could help farmers to pick and dry beans faster and keep the coffee in good condition.

Both the quality and volume of the 2017/2018 crop year, which started in October, are expected to surpass the year before, traders said, adding the ratio of mouldy coffee would be significantly lower.

Earlier this week, Rabobank forecast Vietnam would have a record crop this year of 28.7 million bags, up sharply from the International Coffee Organization's estimate for the prior season of 25.5 million.

Traders said farmers in Daklak were offering coffee beans at 37,300-37,500 dong ($1.64-$1.65) per kg, falling from 38,800-39,400 dong a week earlier and tracking a drop in London prices.

January robusta coffee settled down $44, or 2.4 percent, on Wednesday at $1,757 per tonne, the weakest for the second position since July 2016, with dealers saying coffee was flowing from Vietnam.

Vietnam's 5-percent black and broken grade 2 robusta was traded at a discount of $40 per tonne to the ICE March futures contract or up to a $100 discount to the January contract , traders said.

In Indonesia, the grade 4 defect 80 robusta beans traded at a premium of $50 a tonne to the January contract, tightening slightly from a $60-$70 premium a week earlier, a trader said.

"Prices are really bad today," one trader told Reuters, adding volumes were also low.