Bloomberg News

Coffee in Vietnam Said to Sell at $10 Below to $20 Over Liffe

February 24, 2012

Feb. 24 (Bloomberg) -- Buyers of coffee from Vietnam, the world’s largest producer of the robusta variety, are starting to see lower differentials for beans after futures rallied.

Beans for shipment next month range from a discount of $10 a metric ton to the price on NYSE Liffe to a premium of $20 a ton, according to three traders with direct knowledge of the sales. The beans were at a premium of $30 a ton last week. Differentials correspond to a discount or premium to obtain physical coffee in relation to the futures price.

Coffee futures climbed 3.5 percent yesterday as traders bet Vietnam farmers would keep beans from the market. Roasters are tapping European stockpiles with inventories in warehouses monitored by NYSE Liffe falling since July. They dropped 7.1 percent in the past two weeks, the exchange said yesterday.

“Although the harvest for the Vietnamese crop year that began Oct. 1 is complete, only 40 percent to 45 percent of it had been sold as of mid-February,” German researcher F.O. Licht GmbH, said in a report dated Feb. 22. “Farmers have been holding back stocks in anticipation of higher prices.”

Bean sales may increase in the coming weeks as farmers will need money for crop irrigation and fertilizers, Licht said.

Robusta for May delivery gained 0.4 percent to $2,025 a ton by 10:56 a.m. on NYSE Liffe in London. Robusta beans are grown in Asia and parts of Africa and used to make instant drinks and espresso.

--Editors: Claudia Carpenter, 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: Claudia Carpenter at Ccarpenter2@bloomberg.net.


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