Vietnamese robusta coffee prices fall to four-month low, trade at standstill

Coffee beans are sorted at a factory in Hanoi. Photo by Reuters

This slump follows the country's coffee exports in the first half of the 2016/2017 season hitting a three-year high.

Prices of robusta coffee in Vietnam, the world's largest producer of the bitter variety, have dropped to their lowest level in more than four months, trailing a fall on the global robusta futures market the previous day and weak demand, industry players said.

The bitter beans fell to VND42,000-43,000 ($1.85-$1.89) per kilogram on Tuesday from VND42,700-43,600 the previous day in the Central Highlands coffee belt. At VND42,000 the price is the lowest since December 12, 2016.

ICE July robusta contracts settled down $54, or 2.7 percent, at $1,936 per ton on Monday after slumping to $1,906, the weakest for the second position since September, having lost around 11 percent in the past three sessions, Reuters reported.

It said dealers attributed the recent decline to arabica, which sank nearly 8 percent. One dealer was quoted as saying funds remain net long and could continue to sell in the short term, while supply was ample in the spot physical market but roasters appeared to have adequate cover.

The London market is expected to open later on Tuesday with prices unchanged, but the outlook is negative, analyst Nguyen Quang Binh wrote in a Tuesday report on his blog.

"The physical market is at total standstill," Binh wrote. "Nobody is interested in supply-demand while most people are monitoring the funds' sell-off on the (London) market."

Faster-than-usual sales from Vietnam so far this year are behind roasters' adequate cover, as traders said foreign buyers had built stocks in anticipation of tighter supply in top producer Brazil and a smaller crop in Indonesia, Vietnam's robusta rival.

Vietnam exported 168,000 tons (2.8 million bags) of coffee last month, taking the country's total shipment to 834,100 tons in the first half of the 2016/2017 season, up 2 percent from a year ago and which is the highest level in three years, based on data from Vietnam Customs.

While the March export volume was down nearly 7 percent from a year ago, it was still above the volume shipped by Brazil, ranking Vietnam as the world's biggest coffee exporter last month, based on industry reports.