Bloomberg News

Indonesian Coffee Premium Declines 60% as Bean Sales Increase

June 01, 2012

The premium buyers have to pay for coffee from Indonesia, the third-largest grower of the robusta variety, fell 60 percent over the past week as sales picked up, according to Volcafe, a unit of ED&F Man Holdings Ltd.

Indonesian beans for shipment in June and July were at a premium of $20 a metric ton to the price on the NYSE Liffe exchange in London, the Winterthur, Switzerland-based trader said in a report e-mailed today. That compares with $50 last week, its data showed.

“Differentials have eased slightly recently and selling activities have picked up,” Volcafe said, adding that “good volume” of export business was concluded. A differential is a discount or a premium paid for physical coffee in relation to the futures price.

Bean arrivals at ports for export from Indonesia were about 8,000 tons this week, unchanged from last week and up from 6,000 tons to 6,500 tons in the week ended May 18, Volcafe said.

“Prices remained under pressure due to good arrivals but mainly due to weaker dollar/rupiah,” according to the trader.

In Vietnam, the biggest robusta producer, beans for June and July shipment were at the same price as on NYSE Liffe, up from a discount of $10 a ton last week, the trader said. Remaining stockpiles from the 2011-12 crop that started in October were approximately 4.8 million bags stored in warehouses in Ho Chi Minh City, according to the report.

“It remains difficult to buy,” the trader said. “Domestic market activities are very quiet,” with hardly any coffee being offered for sale, it added.

Bean exports from Vietnam last month were 2.8 million bags, a million bags more than a year earlier, Volcafe estimated.

In India, Asia’s third-largest coffee grower, differentials remained high as the crop had come to an end. “Any robusta coffee left is either committed or looked after by either domestic or exporter market,” Volcafe said.

Robusta coffee for July delivery fell 2.1 percent to $2,135 a ton by 3:29 p.m. in London.

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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