Bloomberg News

Vietnam Coffee Premium Plunges 75% on Inventory Sales, Demand

August 03, 2012

The premium buyers have to pay to obtain coffee from Vietnam, the world’s largest robusta grower, slid 75 percent in a week on sales from stockpiles and slow demand, according to Volcafe Ltd.

Vietnamese beans for August and September shipment were at a premium of $10 a metric ton to the price on the NYSE Liffe exchange, the Winterthur, Switzerland-based unit of commodities trader ED&F Man Holdings Ltd. said in a weekly report e-mailed today. That compares with $40 a ton last week.

There is “pressure to clear the stocks and nearby demand being low, resulted in cheaper free-on-board differentials this week,” Volcafe said.

A differential is a discount or premium paid to obtain physical coffee in relation to the price on the futures market. Free-on-board shipment denotes delivery of a commodity by the seller at no cost to the buyer onto the transporter, such as a vessel, used for shipment.

Coffee exports from Vietnam last month totaled 1.97 million bags, each weighing 60 kilograms (132 pounds), bringing total shipments for the 2011-12 season begun in October to 20.6 million bags, according to the report.

In Indonesia, coffee arrivals at ports climbed to 15,000 to 16,000 tons this week because of dry weather across “large parts” of growing regions, Volcafe estimated. That compares with 12,750 to 14,000 tons last week.

Beans from Indonesia for August and September shipment were at a premium of $40 a ton to the NYSE Liffe price, up from $30 a ton last week, according to the trader.

“A few international trading houses are quite aggressive and buying actively,” Volcafe said.

Robusta coffee for September delivery fell 0.2 percent to $2,224 a ton on NYSE Liffe by 4:26 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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