* Domestic prices widen after London closed unchanged
* Farmers have sold 20-30 pct of their harvest
* Exporters reluctant to trade on VAT relief vagueness
By Ho Binh Minh
HANOI, Jan 14 Trading on Vietnam's coffee market
slowed on Tuesday as foreign buyers sought larger discounts and
exporters were reluctant to sell also because of uncertainty
over a tax relief policy, traders said.
The world's top robusta producer is expected to sell more
coffee to the market in coming weeks ahead of Tet, Vietnam's
biggest festival to mark the Lunar New Year that arrives on Jan.
31, and the selling pressure has kept global prices in check.
Domestic prices widened to 34,400-35,100 dong ($1.63-$1.67)
per kg on Tuesday, from 35,100 dong on Monday and 34,500-34,800
dong a week ago, after Liffe March robusta ended
unchanged at $1,739 a tonne on Monday.
"The selling demand does exist, while buying is not active
as roasters want very low prices," a dealer at a European
trading firm in Ho Chi Minh City said.
Quotations by Vietnamese exporters ranged between a premium
of $10 to a discount of $10 per tonne to London's March contract
for robusta grade 2, 5 percent black and broken, while buyers
bid discounts of $20-$30 a tonne to the March contract.
Vietnamese coffee farmers, who control around 80 percent of
the country's growing area of the crop, have sold between 20 and
30 percent of their harvest under the 2013/2014 crop year that
began in October, traders estimated.
The crop 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.
Traders who toured the Central Highlands coffee belt
recently said farmers could sell more in coming weeks but their
selling will not match the pace of last year due to the current
low prices and growers had also enjoyed higher prices in 2013.
Farmers have been expected to sell quicker if prices reach
38,000-40,000 dong per kg, or when London's front-month contract
rises to at least $1,860 a tonne.
Vietnamese robusta fetched $2,092 a tonne on average last
year, up 5 percent from 2012. But the country's export volume
dropped around a quarter from the previous year to 1.3 million
tonnes, based on government data, due to lower output and
uncertainty about tax refunds, which boosted the prices.
Exporters are still selling slowly despite the government
announcing the scrapping of the 5 percent value added tax
effective from Jan. 1, 2014 due to confusion about its
implementation, traders said.
"Many still don't know how to declare tax as several
provincial tax departments have yet to issue clear instructions,
waiting for Finance Ministry guidance," a second trader in Ho
Chi Minh City said.
Exporters are reluctant to trade also because many are still
waiting for VAT refunds from deals in 2013, traders said.
Vietnam's coffee exports this month could drop to
100,000-150,000 tonnes, from an estimated 120,000 tonnes shipped
in December, traders have said.
(Editing by Muralikumar Anantharaman)