Many farmers in Vietnam, the world's largest robusta producer, refused to deliver beans to exporters after domestic prices rallied to an all-time high of 46 million dong ($2,205) a tonne, creating artificial tightness in the physical market.
Vietnamese beans were offered at discounts of $100 to $120 a tonne to London's May contract , smaller than discounts of $140 to $150 quoted last week. .
"I think half of the exporters are trying to fulfill the contracts from the previous crop. The farmers are the key problem," said a dealer in Singapore.
"They don't even care if you want to sue them in court. They just don't want to sell their coffee even after you remind them that they had signed a contract a few months ago to sell beans at certain level," he added.
Vietnam's 2010/2011 output rose 2 percent from the previous season, slightly below past estimates, with some traders citing smaller beans as a reason for their downward revisions, a Reuters poll showed.
"People may have fixed the price at $1,700 or $1,900, but we are now above $2,200. The question is how shippers are going to cope? They are the ones who are committed to deliver beans to big roasters and traders," said another dealer in Singapore.
"The crop in Vietnam is okay. The crop in Vietnam is bigger than people think."
The International Coffee Organization said Vietnam's 2010/2011 coffee output rose 1.3 percent from the previous crop to 18.43 million bags, while Indonesia's production fell 16.5 percent to 9.5 million bags.
London's May coffee added $19 to end at $2,382 per tonne on Thursday, within sight of a near 3-year high around $2,400 hit in February, when rallies in arabica futures in New York spilled into the robusta market
New York coffee will rise to $2.88 per lb next week based on its wave pattern and a triangle pattern, according to Wang Tao, a Reuters market analyst for commodities and energy technical
n Indonesia, the world's second-largest robusta producer, more beans from an early crop entered the physical market, but purchases from local roasters offered support to prices.
Harvests in Sumatra usually start in March or April, but farmers have been picking cherries since January as the flowering season began earlier in some areas after the previous crop ended last August.
Indonesian export-grade 4, 80 defect beans were offered at a discount of $80 under London's May contract, steady from last week, making Indonesian beans more expensive than Vietnamese robusta.
WEEK AHEAD
Harvests in Indonesia's main growing island of Sumatra will pick up next week, but there are persistent concerns over quality.
"I think high price has also prompted early harvest. Farmers don't want to wait," said the first dealer in Singapore.
"Also, many exporters prefer to sell beans to local roasters because they can expect a better discount of $60 to $70. They will get faster payment while quality-wise, it's not as stringent as export-quality beans."
The USDA expects Indonesia's domestic consumption to rise nearly 3 percent to 1.9 million bags in the 2010/11 year.
The Indonesian Coffee Exporters Association expects Indonesian coffee bean production to fall by 30 percent this year from an estimated 600,000 tonnes in 2010, as rains in key producing areas damage cherries.
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