REPUBLIKA.CO.ID, SINGAPORE - Robustas from Vietnam changed hands at discounts to London futures this week as its harvest progressed while tight supply and sporadic demand from exporters kept Indonesian beans at premiums for prompt shipment, dealers said on Thursday. Indonesia's coffee output could rise nearly 13 percent in the year to September 2013, fuelled by improving weather, while rising demand from local roasters is likely to boost consumption and push up imports, a Reuters survey showed.
Indonesia is the world's second-largest robusta producer after Vietnam, and the two together account for about 23 percent of global output. Robusta is either blended with arabica beans for a lower-cost brewed coffee or processed into instant coffee.
"The prices for Indonesia are all over the place. I guess that's because they are also oversold. Everybody is trying to sell the beans at different prices," said a dealer in Singapore, who trades Indonesian and Vietnamese robustas.
"I've sold 80 defect beans at 120 USD premiums including freight. The London market is also very volatile right now," he added.
Other dealers said Sumatran grade 4, 80 defect beans changed hands at premiums of up to 80 USD to London's January contract , which has slipped more than 10 percent since hitting a 2-month high in early October on worries about ample global coffee supply. Premiums stood at 40 USD last week.
"There are not many people who dare to offer beans aggressively. You may get beans at 50 USD premiums minimum. I would think differentials will get firmer again next week," said another dealer.
"But I think people are buying hand-to-mouth at this price level. It's very expensive compared to Vietnamese beans."
The extended harvest has just ended in Indonesia's main growing island of Sumatra, while last year it finished around August. Heavy rain damaged the crop in the 2011/12 season, causing a severe supply shortage that sent premiums to record highs of 550 USD last year.
A minor crop is expected to start in December ahead of the main harvest in April next year. Indonesia and Vietnam account for about 23 percent of global output, according to the International Coffee Organization.
The new harvest is under way in Vietnam and is expected to peak in mid-November. The previous 2011/12 crop ended with a record-high output of about 1.6 million tonnes. Indonesia premiums could rise further next week if London futures extend losses, but discounts could widen in Vietnam as more beans enter the physical market.
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