Premiums of Vietnamese coffee to London futures prices widened this week as farmers expecting further gains in global prices were hesitant to sell, which could keep monthly shipment volume on par or lower than June’s exports.
London robusta futures prices gained last Friday and on Monday, giving hopes to farmers in Vietnam, the world’s largest producer of the bitter variety, that prices could rise further. Export prices in Vietnam closely track London prices.
«Farmers’ selling has slowed after prices rebounded from low levels last month, and since they saw the rise for two days (in London), they held back from selling,» said a trader in Buon Ma Thuot, the capital of Daklak, Vietnam’s top growing province.
Liffe September robusta contract settled up $26, or 1.5 percent, at $1,785 a tonne on Monday.
The contract fell to $1,704 a tonne on June 14, its lowest since October 2010, and Vietnamese prices hit a 16-month low on the same day.
Robusta widened to 37,400-38,100 dong ($1.76-$1.80) per kg on Tuesday in Daklak from 37,500-37,800 dong on Monday and 37,400-38,000 dong a week ago.
«Companies and some buying agents are offering higher prices to attract farmers’ sale, but their purchase has been slow,» the trader in Daklak said, adding that robusta was even offered at 38,500 dong per kg in some places.
Based on domestic prices, the premiums of Vietnamese beans would be around $80 a tonne to London’s September contract, while exporters were seeking premiums of $100-$120 a tonne for grade 2, 5 percent black and broken beans.
On June 20, the beans, normally traded at discounts to London futures, were offered at $120 a tonne above London prices, the highest since August 2011.
Slowing trade and a thinning of stocks held by farmers could affect the country’s export volume this month.
Two traders forecast 85,000-100,000 tonnes (1.42 million to 1.67 million 60-kg bags) would be exported in July, below to on par with 100,000 tonnes estimated for June.
The forecasts are in line with market expectations that Vietnam would export up to 100,000 tonnes a month between July and September. Vietnam exported 114,400 tonnes of coffee in July 2012.
Unlike Brazil and Colombia, where weakening currencies are expected to keep downward pressure on the market, Vietnam’s depreciation of the dong last week — by 1 percent — has yet to have any impact on the country’s coffee exports, traders said.
«In the next couple of months it may help exporters somehow, but right now we don’t see any changes on coffee prices from the move,» a trader in Ho Chi Minh City said.
Vietnam’s central bank weakened the mid-point rate used for trading on the interbank markets by 1 percent to 21,036 dong per dollar on Friday, saying the move would help stabilise the foreign exchange market.
Source: brecorder.com/markets/commodities/asia/126100-vietnam-coffee-premiums-rise-july-loading-may-dip.html
