Drought has hit 300 hectares of crops, mostly coffee trees, in Dak Lak province in the Central Highlands, Vietnam's largest coffee growing area, local officials said.

"The situation of drought is forecast to get worse towards the end of March and early April," Mai Trong Dung, head of the province's agriculture department, told local media.

Farmers in the Central Highlands sold coffee at 31,900- 33,700 dong ($1.38-$1.45) per kg COFVN-DAK on Friday, down from a range of 33,700-34,000 dong last week.

Traders in Vietnam are complaining they are making losses on fixed contracts as prices have been falling over the past week, and they are also having a hard time securing the beans as farmers refrain from selling due to low domestic prices.

Traders in Vietnam offered 5 percent black and broken grade 2 robusta COFVN-G25-SAI at a $50 per tonne discount to the May contract, compared with $50-$70 last week.

Meanwhile in Indonesia, supplies have started to build up amid a mini harvest but demand remained muted this week.

"Demand is a bit muted but supply has started to come in, but its not much yet," a trader said, adding that local buyers remained dominant this week.

Indonesia's main robusta coffee harvest usually falls around mid year in southern Sumatra.

Indonesia's premium for the grade 4 defect 80 robusta COFID-G4-USD was steady on last week at $70-$80 to the May contract on Thursday, a trader in Lampung said.

Another traders in the province said premiums were $169-$170.

Meanwhile, May robusta coffee .LRCc2 settled down $28, or 1.8 percent, at $1,490 per tonne.