Coffee trade slow on weaker prices, thin buying
Thursday, July 31,2014AsemconnectVietnam - Vietnam's coffee market was quiet this week as low prices discouraged sellers from offloading stocks while buyers were still well-supplied, traders said on Tuesday.
Selling at a slow pace could help Vietnam, the world's top robusta producer, maintain sufficient stocks for loading until early October before fresh beans from the next 2014/2015 crop year start rolling in to the market.
Seasonal rain is due to end in early October, giving way to the harvest in the Central Highlands coffee belt.
Supply was also weak as farmers held back beans on expectations of higher prices, traders said.
Farmers could sell beans more quickly if domestic prices rise beyond 41,000 dong ($1.93) per kg, a Vietnamese coffee exporter said.
On Tuesday, the bitter beans used for making instant coffee stood at 39,900-40,200 dong a kg in Daklak, the country's largest growing province, changing little from 39,800-40,000 dong a week ago. COFFEE/ASIA1
Vietnam exported an estimated 85,000 tonnes (1.42 million bags) of coffee in July, 6.3 percent lower than a year ago, the government has said, below market expectations. Vietnamese beans grade 2, 5 percent black and broken were offered at discounts of $40-$50 a tonne to London's November LRCX4 contract, which closed up 0.5 percent at $2,024 a tonne on Monday.
Traders said the market has stopped quoting differentials to the front-month September contract LRCU4.
OUTPUT TO EASE
Vietnam's coffee output in the year to September 2015 could ease 1.3 percent from the previous season to around 23 million bags due to a drought early this year and torrential rain in recent months, a senior industry official said on Tuesday.
"Coffee trees suffered from a drought during the blossom period and there's been too much rain recently that prompted fungus, so green cherries have dropped," Chairman Luong Van Tu of the Vietnam Coffee and Cocoa Association (Vicofa) said.
Vicofa's projection is below a median estimate of 27.5 million bags found in a Reuters global poll.
As much as 15 percent of the cherries have dropped in several areas in the Central Highlands coffee belt, a factor contributing to a lower output, Tu told Reuters.
Harvesting of the 2014/2015 crop is due to begin from late October in Vietnam. The 2013/2014 season produced around 1.4 million tonnes, or 23.3 million 60-kg bags, he said.
Source: Reuters
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