Bloomberg News

Vietnam’s Coffee Trades at London Prices on Demand, Volcafe Says

November 25, 2011

Nov. 25 (Bloomberg) -- Coffee beans in Vietnam, the largest grower of the robusta variety, are trading at the same price as in London, erasing a discount last week, said Volcafe, the coffee unit of trader ED&F Man Holdings Ltd.

Vietnamese sellers were demanding the same prices as on the NYSE Liffe exchange in London this week to ship coffee in December and January, data from the Winterthur, Switzerland- based trader show. That compares with a discount of of $20 a metric ton the previous week, the trader said today in an e- mailed report. Vietnam’s 2011-12 marketing season, which started last month, ends in September.

Demand for nearby shipments is “good,” Volcafe said in the report. Buyers who are short, or betting on lower prices, are “forced to pay up” and those who bet that the discount would widen “are running out of time,” Volcafe said.

Coffee exports from Vietnam may have fallen 28 percent this month as traders waited for the harvest to gather pace before signing contracts. Shipments may total 50,000 tons in November, compared with 69,000 tons a year earlier, preliminary data from the General Statistics Office yesterday showed.

Exports from the Southeast Asian nation may have climbed 56 percent from the previous month, according to the data. The nation’s shipments totaled 32,000 tons last month.

“The internal coffee flow is increasing in volume but the pipeline is pretty empty,” Volcafe said. “Quality and yields look promising and are expected to improve day by day.”

Indonesian Flowering

The crop in Indonesia, the third largest robusta producer, has had its first flowering in some areas, according to the trader. The 2012-13 crop there will start in April.

“With good weather the hopes are high that the crop will recover from this year’s disaster,” Volcafe said.

Coffee output in Indonesia fell to 7.9 million bags in the 2011-12 season started in April, down from 9.3 million bags in 2010-11, due to heavy rains, data from the U.S. Department of Agriculture show.

--With assistance from Nick Heath in Hanoi. Editors: John Deane, Nicholas Larkin

To contact the reporter on this story: Isis Almeida in London at ialmeida3@bloomberg.net

To contact the editor responsible for this story: John Deane at jdeane3@bloomberg.net


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