Cheap cup of coffee a has-bean

Prices are surging on the back of lower exports from Vietnam, the world's second-biggest coffee producer, where heavy rain has disrupted harvests.

There were also fresh reports last week of damage to stockpiles of the commodity in Italy.

Last Tuesday, Robusta prices jumped to $2086.98 per tonne - a summit not reached since May, 1999.

The development also lifted the price of Arabica beans which are mainly grown in Brazil, the world's leading coffee producer.

"Coffee prices have risen sharply on near-term supply concerns, but an improved Vietnam crop should ease market tightness from November," Standard Chartered analyst Helen Henton said.

"However, low stock levels have increased medium-term vulnerability."

High-caffeine Robusta, a bitter variety used in instant coffee, and the more expensive Arabica are the two most widely traded types of coffee.

Since the 1990s, Vietnam has come from nowhere to be the second largest exporter after Brazil.

But the southeast Asian country's output has taken a knock.

"Vietnam's particularly poor crop of 12 million bags in 2005-2006, down 12 per cent year-on-year and 19 per cent below the record crop in 2004-2005, has reduced stockpiles," Ms Henton said.

Arabica, which is harder to grow than Robusta, accounts for more than 60 per cent of total global coffee output.

www.bordermail.com.au