Asia Coffee-Harvest of minor crop starts in Sumatra; roasters chase Vietnam

Thu Jan 16, 2014 2:40am EST

Related Topics

* Indonesia premiums steady at $80, but demand low

* Vietnam beans traded at discounts of $10

* Minor crop in Indonesia, but quality poor due to rains (Adds technicals)

By Lewa Pardomuan

SINGAPORE, Jan 16 (Reuters) - Harvesting of a minor crop has started on Indonesia's main coffee growing island of Sumatra but heavy rains have hurt quality, while Vietnamese robustas have been sold at smaller discounts as roasters step up purchases, dealers said on Thursday.

Farmers and exporters in top robusta producer Vietnam were offering more beans to raise cash ahead of the Tet festival, which celebrates the Lunar New Year later this month. But demand from roasters helped prices defy pressure from rising supply.

Trade in second-largest robusta producer Indonesia was sluggish as farmers held back beans, waiting for domestic prices to improve. COFID-G4-LAM

"I can say that people are coming to buy Vietnamese beans. We see shippers willing to offer more forward shipments. They want to sell before Tet to get money," said a dealer in Singapore who trades Vietnamese and Indonesian robustas.

"We do see more offers in bigger quantities."

Grade 2, 5 percent black and broken beans were traded at $10 a tonne below London futures, while offers were on a par with Liffe. Last week, the beans were offered at discounts of $25 to $30 a tonne to futures.

Higher-quality robustas usually purchased by Nestle , the world's biggest food group, were traded at premiums of $25, according to dealers.

The crop in Vietnam is forecast to have yielded up to 29 million 60-kilogram bags, based on traders' estimates, up from around 25 million bags in the 2012/2013 season that ended in September.

March robustas on Liffe, which often track New York arabica futures, dropped by $22 to end at $1,706 a tonne on Wednesday, but the contract had moved away from a 3-1/2-year low of $1,431 hit in November.

Sumatran 4,80 defect robustas stood at premiums of $80 to London futures, within sight of last week's range of $40 to $80, with no deals. A minor crop, or "fly crop", began in Sumatra, with the main harvest expected to start in March or April.

Indonesia's output in 2012/13 was estimated to have risen 74.7 percent to 12.7 million bags, according to the International Coffee Organization.

"Beans from the fly crop are available but the quality is very bad because farmers can't dry it. It has been raining a lot," said an exporter in Sumatra.

"Beans from the previous crop are still around but the thing is that farmers and suppliers are quoting high premiums of $40. Exporters are only willing to buy at zero to $20 premiums."

Indonesia's coffee output is likely to see a modest increase in the crop year to September 2014, but strong domestic demand will boost consumption by nearly a third, according to a Reuters survey.

WEEK AHEAD

Indonesian beans could slip next week as Vietnam offers competitive prices. (Editing by Joseph Radford and Himani Sarkar)

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