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Indonesian Coffee Premium Climbs 15% as London Futures Retreat

June 07, 2013

Buyers of coffee from Indonesia, the third-biggest producer of the robusta variety used in instant drinks, are paying a bigger premium for their beans as local prices remain high and futures fall, according to Volcafe Ltd.

Indonesian beans for shipment in June and July were at a premium of $150 a metric ton to the price on the NYSE Liffe in London, the Winterthur, Switzerland-based unit of commodities trader ED&F Man Holdings Ltd., said in a weekly report e-mailed today. That compared with $130 two weeks ago.

Robusta coffee traded in London slid 2.2 percent this week to $1,852 a ton, extending a drop in the previous two weeks. Futures are heading for the first second-quarter drop since 2009. Local prices were 18,300 to 19,700 rupiah a kilogram ($1,840 to $1,977 a ton), Volcafe data showed.

“With the recent lower Liffe futures, local market and differentials remain firm,” the trader said, referring to a discount or a premium paid to obtain physical coffee in relation to the futures price. Heavy rain in some growing areas is “still disrupting the flow of coffee,” the trader said.

Rainfall this week is delaying the coffee and cocoa harvests in Indonesia, MDA Weather Services in Gaithersburg, Maryland, said in a report e-mailed yesterday. Dry weather will probably return to Sumatra next week, “allowing the harvest to get back on track,” it said. Sumatra island is where Indonesia’s main coffee-producing area is located.

Bean deliveries from farms in Indonesia totaled 6,000 tons to 6,600 tons this week, according to Volcafe. That compares with 6,100 tons to 6,700 tons two weeks ago. Indonesia is harvesting its 2013-14 crop that started in April.

Buyers of coffee from Vietnam, the world’s biggest robusta grower, are also paying a bigger premium, according to the report. Vietnamese beans for shipment in June and July were trading at $120 a ton above the London futures, up from $100 two weeks ago, Volcafe data showed.

To contact the reporter on this story: Isis Almeida in London at

To contact the editor responsible for this story: Claudia Carpenter at

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