Vietnam offers new premiums, Indonesia slows sales
Friday, November 27,2015AsemconnectVietnam - Vietnam's coffee exporters have started offering premiums to ICE March contracts on expectation fresh supply would jump next month, while Indonesia is slowing sales in anticipation of higher prices, traders said on Thursday.
Robusta coffee futures eased, with a slowdown in selling by Vietnamese farmers as prices hover near their two-year lows. January futures LRCc2 settled down 1.2 percent at $1,532 per tonne on Wednesday, near their two-year low of $1,494 hit on Nov. 18.
Vietnam's robusta grade 2, 5 percent black and broken coffee was sold at premiums of $20-$40 a tonne to the March contract LRCH6, which ended 1 percent down on Wednesday at $1,562 a tonne.
Robusta grade 1, similar to the Sumatran coffee, was offered at premiums of $70-$90 a tonne.
"Fresh beans are arriving slowly, but buying has also been slow," said a trader at a foreign firm in Ho Chi Minh City.
Vietnam's fresh beans are smaller than a year ago, but forecasts of smaller crop in 2015/16 are too preliminary, traders said.
In Indonesia, sellers were holding onto stocks on hopes the next crop could be affected by dry weather and that they would be able to sell their holdings at a higher price in 2016.
"Now, we're still holding some stocks and have put the brakes on selling," said a Lampung-based trader.
Sumatran robusta grade 4, 80 defects COFID-G4-USD stood at premiums of $120-$160 a tonne to London's January contract, compared with premiums of $130-$150 a tonne last Thursday.
"Due to the El Nino, it is confirmed that next year our production will be lower," said a Semarang-based trader. "A lot of people are putting the brakes on selling coffee this year and expecting to sell theirs next year with a higher price."
ROBUSTA OUTPUT SEEN UP
Rising output from Vietnam, the world's top robusta producer, and its rival producer Indonesia, according to U.S. Department of Agriculture attache, could help narrow global coffee deficit and relieve pressure on prices.
Vietnam's output could rise 7 percent from 2014/2015 to 29.3 million 60-kg bags in 2015/2016, while Indonesia's production could jump 20 percent to an estimated 10.6 million bags, reports from the U.S. Department of Agriculture attache said.
Traders project Vietnam's current crop output at between 26.7 million and 29 million bags.
Global coffee deficit for 2015/2016 is estimated at between 2.7 million and 4.8 million bags, according to several industry players.
Source: Reuters
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