Asian Coffee Position on the Market

Sharp losses in coffee futures on the London International Financial Futures and Options Exchange and New York Board of Trade last week have compounded the shortage, as farmers and shippers are holding back stocks in the hope that prices will rebound to levels at the end of January.

"The demand for (Asian) coffee beans has been tremendous," said a major foreign exporter with warehouses in Vietnam and Indonesia.

Indonesia is at the end of its Robusta crop, and finding enough good quality beans to fill orders has therefore been difficult, he said.

Indonesian-based exporters of Arabica beans say the problem is not so much about availability as there's no supply problem in quantity, but in quality.

Bean quality depends upon several factors such as moisture content and size, much of which is influenced by weather and cultivation techniques.

The country's Arabica crop is still being harvested, and although supplies are available, rain has delayed transporting and drying of harvested beans, while also reducing bean quality.

Indonesia's supply of Robusta is expected to be stretched until the next crop arrives in April.

Local prices for Robusta grade 2 had been rising until last week, when losses in futures prompted farmers to stop offering, and exporters chose to wait in expectation that futures will fall further before finding support.

Offers for Robusta grade down from the previous week's, but still near a seven-month high. Arabica Mandheling, for March/April shipment also near a seven-to-eight-month high.

An exporter of Arabica beans in Papua New Guinea, currently at the end of the old crop and still waiting for the new crop to be ready, said that at such times exporters monitor the quality of beans they receive from suppliers, as there is a tendency among suppliers to mix poor quality beans with good beans.

Vietnam has also finished harvesting its Robusta crop in January, but sales of beans have been slow as farmers await higher prices amid expectations of a smaller crop.

A smaller-than-expected crop in Vietnam last year drained stocks throughout the region, as many Vietnamese exporters had to buy Indonesian Robusta beans to fulfill shipment commitments.

Offers for Robusta grade have fallen slightly over the past ten days.

Current Indonesian Robusta stocks are said to be very low at around 10,000 tons or less.

The shortage of quality coffee beans has left many major coffee exporters short, forcing them to scrape together stocks from various warehouses and suppliers.

One exporter in the region, who played down the delay as being relatively normal, attributed the shortage in Asia to the recent surge in demand at a time when global stocks are low. We have stocks, we can bridge these situations," he said.