April 24, 2013 / 9:12 AM / 4 years ago

Indonesia faces coffee shipment delays, beans scarce

* Up to 3,000 T of shipments may be delayed in April -traders

* Sumatran premiums reach up to $100 despite harvest

By Lewa Pardomuan

SINGAPORE, April 24 (Reuters) - Coffee exporters on Indonesia's main growing island of Sumatra are likely to delay shipment of up to 3,000 tonnes of beans in April after erratic weather cut into supply at the season's peak, dealers said on Wednesday.

Although the volume is just a fifth of Sumatra's exports in March, delays in shipments from second-largest robusta producer Indonesia could further tighten supply in Asia, with rival Vietnam having completed its harvest in December.

Indonesia and top robusta producer Vietnam together account for nearly a quarter of the world's coffee output.

Indonesia's coffee output is forecast at 10.95 million 60-kg bags, or 657,000 tonnes, in the year to September 2013, up from 8.62 million bags previously, the International Coffee Organization says.

Four dealers in Indonesia and Singapore estimated between 2,000 and 3,000 tonnes of shipments could be postponed this month as exporters who had signed contracts to sell forward scrambled to get coffee, whose premiums stand at up to $100 to London futures, their highest since January.

"Many exporters are overcommitted. There should be plenty of delays in April, which could reach 3,000 tonnes," said a dealer in Java, who trades Sumatran beans.

"If our forecast proves accurate, output could fall by 20 percent or even 25 percent. Daily arrivals have only reached 250 to 300 tonnes in the past two weeks and this is dangerous."

With beans from Vietnam also trading above the London market, competition between the rivals could heat up because of strong demand for instant coffee.

Exports of the robusta variety from Sumatra nearly tripled in March from a year earlier, to 14,336.9 tonnes, trade data shows.

An early start to the current harvest initially raised hopes for an abundant crop after damage from heavy rain in the season to September 2012 caused a severe shortage that drove premiums to all-time highs at $550.

But dealers later said several plantations in Sumatra had suffered from a lack of rain late in the flowering season last year, and now, a heavy downpour was disrupting the harvest.

"It's been raining every day, which affects harvesting and drying of the beans. I would say about 3,000 tonnes of shipments could be delayed in April, and the quantity may even be higher for delivery to the local market," said a dealer in Sumatra.

"Some exporters are overcommitted, and supply is short. The impact is that local prices have become extremely expensive."

Sumatran beans normally sell at, or slightly below, London futures, whenever the harvest peaks, as daily arrivals could reach as much as 1,500 tonnes. The provinces of Bengkulu, South Sumatra and Lampung in Sumatra make up 75 percent of Indonesia's output.

"A lot of exporters think the season should be in full swing by May, but they don't see a lot of coffee coming from plantations right now," said a dealer in Singapore, who trades Indonesian and Vietnamese beans.

"Production should fall from last year by about 10 percent. Premiums are now very subjective. They range from $20 to $90 a tonne, depending on your perspective on the crop."

The U.S. Department of Agriculture attache in Indonesia has a slightly different forecast from the ICO, estimating output to rise 17 percent to 9.7 million bags in the season to September 2013, boosted by good harvest weather, while consumption grows 7.6 percent to 2.54 million bags. (Editing by Clarence Fernandez)

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