November 30, 2012 / 8:26 AM / 5 years ago

UPDATE 1-Asia Coffee-Indonesia premiums at 6-mth high; trade freezes

* Indonesian premiums rise to $170, highest since May

* Vietnamese beans sold at $30 discounts (Adds technicals)

By Lewa Pardomuan

SINGAPORE, Nov 30 (Reuters) - Premiums for Indonesian robusta jumped this week to their highest since May as supply scarcity ahead of the new crop began to affect exporters, but Vietnamese beans changed hands at discounts to futures, dealers said on Friday.

The harvest ended in October in Indonesia, the world’s second-largest robusta producer after Vietnam, and dealers awaited a smaller crop to start in December or January. The main harvest is still a few months away in April or May.

Sumatran grade 4, 80 defect beans were quoted at premiums of $150 to $170 to London’s January contract, higher than $100 last week, with no reports of deals. Vietnamese beans were traded this week at $30 discounts to London futures.

“People who still have the 80-defect beans are holding back their stocks. I would say the premium is at least $150,” said a dealer in Singapore.

“It’s crazy in Indonesia. Most trading houses are short, and they are also oversold. I believe this problem will last until February,” said the dealer, adding that exporters were struggling to fulfill contracts.

Favourable weather helped Indonesia produce more bigger beans, or the Extra Large Bean variety, in its recent crop, but most roasters and processed food producers are still chasing the commonly traded 80 defects beans.

Indonesia’s coffee output could rise nearly 13 percent in the year to September 2013, fuelled by improving weather, while rising demand from local roasters is likely to boost consumption and push up imports, a Reuters survey shows.

“The price for ready stock beans is going up because supply is limited. But only those who are desperate will be buying beans at the current premiums,” said another dealer in Singapore.

“Vietnam’s differentials are pretty similar. We purchased Vietnamese beans at $30 under London yesterday. Demand from European roasters is still there. The price is competitive, compared to Indonesian beans.”

Vietnam grade 2, 5 percent black and broken beans were offered at $30 to $70 below London’s January contract last week. Vietnam harvested a record crop of about 1.6 million tonnes in the recently ended 2011/2012 season on higher yields and as new areas became productive.

Vietnam and Indonesia account for about 23 percent of global output. Robusta is either blended with arabica beans for a lower-cost brewed coffee or processed into instant coffee.


Indonesian robusta could stay at current levels next week because of limited supply, which may prompt some consumers to turn to Vietnam.

“People are not buying Indonesian beans at current premiums. They prefer to wait. If they can replace the beans with Vietnam robustas, then why not?” said the first dealer in Singapore.

London’s January robusta coffee futures inched up $3, or 0.2 percent, to close Thursday at $1,938 a tonne, tracking gains in New York’s arabica futures.

Arabica futures are the weakest performer on the Thomson Reuters-Jefferies CRB index in 2012, having lost around 35 percent from the end of 2011. (Editing by Clarence Fernandez)

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