SINGAPORE – Trading houses offered beans from Vietnam's new crop at discounts to
London futures this week, but Indonesian robustas returned to premiums despite
a lack of interest from roasters, dealers said on Thursday.
Vietnam's grade 2, 5 percent
black and broken beans from the latest harvest were valued at US$30 below
London's January contract. There were no offers for new crop beans last week,
but robustas from the recently-ended season fetched smaller discounts.
"Maybe you can put the old
beans at minus $10. London went up last night but prices have fallen more than
$140. It's a bit quiet," said a dealer in Singapore, who trades robustas
from Vietnam and Indonesia.
London's January robusta contract
ended $28 a tonne higher at $2,102 on Wednesday despite declines in New York
arabica futures, but prices have dropped around 6 percent since hitting a
2-month last week as concerns over ample supply resurfaced.
Since futures and differentials
move in opposite directions, sellers typically cut discounts whenever London
futures drop. Vietnam's old crop beans were offered at $40 below futures last
week.
Harvesting in top robusta
producer Vietnam is expected to pick up pace late this month and peak in
November, while the current crop is nearly over in Indonesia. The two countries
account for about 23 percent of global output, according to the International
Coffee Organization.
The ICO has revised up its
forecast for 2011/12 world coffee output to 134.3 million 60-kg bags, partly
due to climbing output in Vietnam.
In second-largest robusta
producer Indonesia, Sumatran grade 4, 80 defect beans, which were last quoted
at premiums in late September, stood at $20 above London futures. The beans
were offered at discounts of $10 to $20 last week.
Buyers, however, were showing
interest in $10 discounts.
"Mayora has decided to stop
buying raw coffee from Lampung until next January because they are well covered
for the next three months," said a dealer in Sumatra, referring to
processed food producer PT Mayora Indah.
"But offers for 80 defects
are now at plus $20 above London on an FOB basis. There are no more discounts
because London prices have fallen continuously."
Indonesian coffee production in
the 2012/13 season is forecast at 9.7 million bags, a rebound of 1.4 million
due to favourable weather, according to the U.S. Department of Agriculture.
Week ahead
Vietnam's beans from the new crop
could be offered at wider discounts next week as the harvest picks up, but
robustas from the previous harvest could stay at the current level if London
futures extend losses.
Almost 10 percent of the current
crop in Vietnam has been harvested, according to coffee trader SW Commodities.
Reuters
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