HANOI (Sept 23): Discounts on Vietnamese robusta coffee to be delivered from December narrowed against London futures this week, due to tighter supply and the possibility of a late start to the 2014/15 harvest, traders said on Tuesday.
Harvesting of the new crop is expected to start in November in the world's largest robusta producer, and a strong flow of fresh beans could be available for export from December, slightly behind schedule, traders said.
"Last July the early harvest already started in some areas, while now the process has yet to begin, suggesting a late start of the harvest," a trader with a foreign firm in Ho Chi Minh City said after surveying the Central Highlands coffee crop.
Farmers had also stopped selling, citing low stocks and lower prices, slowing trading to a trickle, traders said.
Robusta grade 2, 5 percent black and broken to be loaded from December onwards were quoted at discounts of $30 a tonne to the London January contract, a sharp drop from discounts of $80-$85 a tonne a week ago.
"Exporters see scant supply and a possible late start of the harvest so they have narrowed the discounts this week," another trader said.
On Tuesday robusta beans were quoted in a wider range of 38,400-38,600 dong per kg from 38,600 dong on Monday, and they were lower than 39,000-39,300 dong a week ago.
The beans were at around 36,300 dong per kg during the first week of October 2013, when the previous crop year started.
Domestic prices eased slightly on Tuesday after London's November robusta contract lost $4, or 0.2 percent, to close at $1,936 a tonne on Monday.
Discounts on beans for loading in October stood unchanged at $30-$40 a tonne to the London November contract, placing the beans at $1,896-$1,936 a tonne, free-on-board basis.
Farmers aimed to sell beans if prices rise above 40,000 dong ($1.89) per kg, and sales could pick up if prices rise to 41,000 dong or higher, traders said.
Traders estimated Vietnam would have 200,000-300,000 tonnes (3.33 million to 5 million 60-kg bags) of beans left to be carried forward to the next season, compared with around 200,000 tonnes brought in from the previous 2012/2013 season.
The U.S. Department of Agriculture forecast Vietnam's carryover stock at 3.25 million bags, up from 1.86 million bags in the 2012/2013 season.
Ho Chi Minh City's warehouses have around 200,000 tonnes, trading firms and export companies hold a combined 100,000 tonnes in stock, and farmers also had small stocks left, the first trader said.
(Tues 23/09/14 17:37:43)