HANOI, April 14 – Coffee sales in Vietnam further strengthened in the past week as farmers sold more stocks of the commodity to exploit higher prices and strong demand from exporters, traders said on Tuesday.
They said domestic prices had risen more than 6 percent in the past month on robust demand from foreign buyers as well as higher London futures prices.
On Tuesday, the industry body Vietnam Coffee Association (Vicofa) said domestic prices in Daklak, Lam Dong and Gia Lai, the country’s largest growing provinces, averaged 24,900 dong-25,000 dong ($1.4-$1.41) per kg, from 24,800 dong on Monday and 23,500 dong a month ago.
Free-on-board prices for spot shipments stood at $1,450 a tonne on Tuesday, up $15 from $1,435 on Monday and $1,430 a tonne a week ago, Vicofa said.
“We expect sales from farmers to stay strong throughout this week as the current price level should encourage them to unload stocks,” a trader in Daklak capital Buon Ma Thuot said.
Traders said discounts to London’s May contract stood at $120 per tonne for spot shipment, making Vietnamese robusta grade 2, 5 percent broken at $1,450 a tonne, free-on-board basis , in line with Vicofa’s reports.
About 5,000 hectares (12,400 acres) of coffee crops in Daklak, Vietnam’s top growing province, are being affected by a severe dryness, state media quoted the provincial government as saying this week.
The six-month dry season is in full swing in Daklak. It often ends late this month or in early May.
Vietnam, the world’s second-largest coffee producer after Brazil, forecast last week its exports of the commodity would be steady at between 900,000 tonnes and 1 million tonnes (15 million-16.7 million bags) this year and in 2010 [ID:nHAN497014].
The coffee crop year runs from October to September but all government reports on production and trade in coffee, 95 percent of which is the robusta variety used for making soluble coffee, are based on the calendar year.
Most of this year’s coffee exports will come from the 2008/2009 harvest that ended in January. Farmers often retain part of the current stock to blend with beans from the next harvest due to start in late October for sales.
The coffee association has revised down nearly 6 percent its estimate of the harvest output, to 16 million bags, from a December figure of 17 million bags.
Vietnam exported 10.08 million bags between last October and March 2009, up 16.2 percent from a year earlier, government statistics show. ($1=17,750 dong)