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Vietnam coffee prices rise on global demand, domestic stockpiles
A coffee shortfall in the international market is to send Vietnamese coffee prices skyward as traders race to stockpile raw beans for export contracts, the Vietnam Coffee- Cacao Association forecast.
The association cited insufficient coffee sources propelled by global demand exceeding supply while crop failures cut into production of coffee giants Brazil and Indonesia for the price rise.
Vietnamese prices are to increase VND20,000 (US$1.3) per kilogram from the current rate of VND19,000, according to the association.
Coffee rates hit the new year high of VND19,000 ($1.1) per kilogram in the second week of this month, up 8 percent from late June, prompting exporters to unload stocks, having tracked London futures market gains as prices were at five-month highs.
Robusta bean prices edged up to VND19,100 ($1.19) per kilogram in Vietnam's Central Highlands coffee belt, after the September contract gained $40 to close at $1,310 per ton, but traders said stocks were exhausted.
Traders sold tons at fresh highs, so with more price increases in the near future, they are now offering to sell shipments from late July or August as stocks are thin, pressuring local prices.
The domestic prices put export quotations for Vietnamese Robusta grade 2.5 percent black and broken at $1,240 per ton, free-on-board basis for spot shipment, but exporters chose to holdfast, traders said.
Stocks in Vietnam have dwindled as the harvest ended in January and the new harvest will only start from mid-October.
Government figures showed Vietnam exported 726,000 tons of coffee in the first nine months of the current coffee crop year ending this September, up 12.6 percent from a year earlier.
Traders said Vietnam might still have 70,000 to 80,000 tons more to sell, given the crop output of 720,000 tons and the stock carried over from the previous crop year of 130,000 tons.
Vietnam's output in 2005-06 would be 600,000 to 650,000 tons, down 30 percent on last year's drought, said the association.
The association proposed the government and relevant offices develop dedicated coffee growing areas to stabilize output [ideally 750,000 tons per year], maintaining coffee quality as well.
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