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Saturday, December 25, 2010

Indonesian coffee beans were being offered on discount at the London futures market

Indonesian coffee beans were being offered on discount at the London futures market on slowing demand as buyers turned to Vietnam where the harvest is still underway, traders said on Wednesday. Sumatran grade 4,80 defect was offered at a discount of between $20-$25 per tonne to London's March contract this week after exporters offered the beans on par with London earlier this month.

"Buyers are looking at Vietnam because supply is still plenty there. We can't match with what Vietnam is offering," said a dealer in Bandar Lampung, the provincial capital of Lampung province and main port for robusta exports. After Vietnam, Indonesia is the world's second largest producer of robusta coffee, which is used in instant blends.

Discounts for Vietnam's robusta grade 2, 5 percent black and broken beans were sought by exporters at $140-$145 a tonne to London's March contract, widening from $130-$140 a tonne last week. Buyers bid at $150-$155 to March contracts. Vietnamese farmers have been trying to end harvesting a month earlier than usual because of high production costs and fears of theft as prices remain near 28-month highs.

Rallying prices of arabica beans, which hit a 13-1/2 year high on ICE US Futures on Tuesday, have prompted buyers to switch to robusta. Most active London's March robusta coffee futures increased $20 to finish at $2,010 per tonne on Tuesday. Buyers, however, want to buy Sumatran coffee beans at a larger discount of between $50-$80 per tonne under London's March prices, dealers said, although exporters won't budge because of tight supply.

"There are only large beans and low grade ones available, so basically there is no offer for the 80 defect," said another dealer in Bandar Lampung, adding exporters are still struggling to collect beans to meet contracts for next year. Indonesia's coffee exporters have stockpiled at least 120,000 tonnes of beans from this year's harvest due to concerns over meeting next year's contracts after heavy rains reduced production.

WEEK AHEAD Dealers in Lampung will be watching for flowering which will takes place early January for signs of improving coffee supply for next year. "If there is no heavy rains until early next year, then the harvest is safe and we can start offering new crops in February," the second Lampung dealer said. Dealers will also be watching if Vietnam completes its harvest, as expected, before the New Year. For the latest updates PRESS CTR + D or visit Stock Market news Today

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